Lost in Translation: Till v. SCS Credit Corp. and the Mistaken Transfer of a Consumer Bankruptcy Repayment Formula to Chapter 11 Reorganizations
Bankruptcy, Corporate Law, Finance, Reorganization
This Article argues that courts overseeing chapter 11 cases have been mistakenly invoking the Supreme Court’s 2004 decision in Till v. SCS Credit Corp.—which specified a consumer-friendly formula for setting the interest rate on the remaining payments on a loan that financed a used pickup truck—at the expense of over a century of Supreme Court precedents that established the contrastingly creditor friendly “fair and equitable” standard for repayment of business debts, as well as disregarding a clear statutory distinction between the present value tests in chapters 11 and 13. This Article also discusses the controversial 2014 decision in Momentive Performance Materials and is particularly helpful in light of the recent publication by the ABI Commission to Study the Reform of Chapter 11 of its voluminous 2012–2014 Final Report and Recommendations. That Report concludes, with little explanation, that Till should not be applied in chapter 11 cases. This Article provides a detailed justification of that position, serving as a guide for judges who are tasked with analyses of chapter 11 cramdown interest rates and assisting those practitioners who would argue that application of the Till “prime-plus” formula violates existing “fair and equitable” jurisprudence. This Article also provides academics with additional historical and jurisprudential background concerning Till in the consumer bankruptcy context.
Mark J. Thompson and Katie M. McDonough,
Lost in Translation: Till v. SCS Credit Corp. and the Mistaken Transfer of a Consumer Bankruptcy Repayment Formula to Chapter 11 Reorganizations,
20 Fordham J. Corp. & Fin. L. 893
Available at: https://ir.lawnet.fordham.edu/jcfl/vol20/iss4/1