Delaware Court in Energy Future Holdings Case Follows SDNY in Denying Make-Whole Premium After Acceleration Based on Plain Language of Loan Documents

by Nicholas F. Kajon
The Energy Law Report

As a result of historically low interest rates and abundant global liquidity, borrowers have ample opportunities to refinance high-yield debt issued years earlier. While borrowers will save money on interest expense, lenders will lose their expected rate of return. Lenders often use make-whole premiums, no-call provisions and other yield-maintenance protections to ensure their bargained-for return for the life of the loan, or to assure compensation for lost interest in the event of early repayment. A make-whole premium is a formula-based payment to provide the lender with the net present value of future interest payments that will not be made due to early repayment.

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