The Commercial Finance Association has filed an amicus brief in the US Supreme Court in In re National Energy & Gas Transmission Inc that was recently decided by the Fourth Circuit Court of Appeals. The decision challenges the ability of a creditor to apply a payment from a guarantor first to accrued interest and the balance to principal, a result that would have serious implications for CFA members and lenders in general. The majority held that Bankruptcy Code 502(b)(2) required the creditor to apply all $140 million it received to principal, despite the fact that it had the right to apply payments to principal or interest under the guaranty agreement.
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"CFA Files Brief Urging Supreme Court to Overturn Lower Court Decision That Limits Creditors' Ability to Apply Payments Under Guaranty Agreements"Please download to view full document