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Cuker Interactive, LLC filed a Chapter 11 bankruptcy petition on December 13, 2018, in the United States Bankruptcy Court for the Southern District of California. Because it was solvent at confirmation, the debtor proposed to pay secured creditors in full, with interest at the contract rate, and general unsecured creditors in full, with postpetition interest at the “legal rate,” or a rate determined by the Court that leaves the creditors unimpaired.[1] But what rate is that?
Section 1124(1) provides that where a Chapter 11 plan, and not the Bankruptcy Code, “impairs” a claim or interest, the impaired class is entitled to vote on the plan unless it “leaves unaltered the legal, equitable, and contractual rights” of the holders.[2] In this case, unsecured creditors argued that they were “impaired” because the plan did not require the debtor to pay postpetition interest at the contractual rate or a hig