The "Reinstatement" Trap of Section 1124 of Bankruptcy Code
March 25, 2010
The decision of the Bankruptcy Court for the Southern District of New York in the Charter Communications case stunned lenders. The Bankruptcy Court concluded that the debtor could "reinstate" its pre-petition credit facility upon its exit from Chapter 11 as part of its plan of reorganization. As result the debtor maintained the benefit of the low interest rate of such facility established before the disruption of the credit markets.
How did this happen? Is there anything a lender can do? See our note discussing the case and its ramifications.