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Judge rules W.R. Grace bank lenders not entitled to default interest
By Caroline Salls
Pittsburgh, May 19 - W.R. Grace & Co.'s bank lenders are not entitled to post-bankruptcy interest on their claims at the default rate, according to a claims objection ruling issued Tuesday by the U.S. Bankruptcy Court for the District of Delaware.
According to the opinion filed by judge Judith K. Fitzgerald, the bank lenders feel they are entitled to default interest because the company allegedly conceded solvency when it filed a plan of reorganization in 2008 that calls for equityholders to retain their interest.
However, the judge said the company's solvency has not been established.
In addition, Fitzgerald said the bank lenders claim they are entitled to the default interest in connection with alleged post-bankruptcy defaults by W.R. Grace, but the judge said there is no evidence to substantiate a default on the bank lenders' claims.
In the opinion, Fitzgerald said the bank lenders are unsecured creditors that will be paid 100% of the principal balance of their claims under the proposed plan, plus interest at a rate that exceeds the non-default rate provided in their contract.
Additionally, the judge declined to rule Tuesday on the lenders' arguments that Grace's plan is not fair or in the best interest of creditors, instead leaving those decisions for the plan confirmation hearing.
W.R. Grace, a Columbia, Md.-based specialty chemicals company, filed for bankruptcy on April 2, 2001. Its Chapter 11 case number is 01-01139.
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