Ultra Petroleum Corporation, et al. v. Ad Hoc Committee of OpCo Unsecured Creditors, et al.

The Bankruptcy Code disallows claims for “unmatured interest,” i.e., claims for interest not yet mature when the bankruptcy petition was filed. 11 U.S.C. §502(b)(2). In the decision below, the Fifth Circuit unanimously (and correctly) held that this provision by its terms disallows respondents’ claim for a $201 million “make-whole” amount that was explicitly designed to compensate respondents for future unmatured interest. But a two-judge majority then went on to hold that an unwritten, judiciallycreated “solvent-debtor exception” dating back to preCode practice overrode the plain statutory text and allowed respondents to recover from petitioners both that $201 million make-whole amount and an additional $186 million in post-petition interest at steep contractual default rates. The decision below is the second in less than a year to hold, over vigorous dissent and in conflict with numerous other courts, that an unwritten “solvent-debtor exception” supersedes the plain language of the Bankruptcy Code and permits creditors to recover amounts that the Code expressly disallows. Notably, the decision below held that decisions of this Court compelled this atextual approach. The question presented is: Whether an unwritten “solvent-debtor exception” overrides the Bankruptcy Code’s statutory text and allows creditors in solvent-debtor cases to recover amounts that the Code disallows.