Postpetition Interest on Unsecured Claims in the Case of a Solvent Debtor: Toward a More Consistent Statutory Regime – Note by Alexander F. Porter

From Volume 81, Number 6 (September 2008)
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One important rule of the Bankruptcy Code is that a creditor generally is not entitled to receive interest on a claim that accrues after the date when the bankruptcy petition is filed. As with most general rules, however, there are several exceptions to this ban on postpetition interest, one of which is that postpetition interest may be allowed in certain cases when the debtor is solvent. This exception is expressly codified in § 726(a)(5) of the Code, which evinces a policy in favor of requiring debtors to pay postpetition interest on creditors’ claims when the debtor can afford to do so.