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Restructuring Update

Has the Make-Whole Been Plugged? The Fifth Circuit’s Latest Opinion in Ultra Petroleum

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On October 14, 2022, the U.S. Court of Appeals for the Fifth Circuit issued its long-awaited make-whole premium ruling, holding that Section 502(b)(2) of the Bankruptcy Code may disallow make-whole amounts, whether labeled as liquidated damages or as the economic equivalent of unmatured interest.1 Although the Ultra opinion affirms the Southern District of Texas bankruptcy court’s allowance of the make-whole amount under the facts of this particular case, it deviates from the bankruptcy court’s reasoning and allows the make-whole amounts solely due to the “solvent debtor exception.” 

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