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United States Court of Appeals for the Fifth Circuit
October 14, 2022, Filed
[*142] Jennifer Walker Elrod, Circuit Judge:
Bankruptcy is ordinarily for the insolvent. The Bankruptcy Code enables economically viable businesses in financial distress to restructure and shed some of the debt burden that crippled them. Sometimes, however, initially insolvent debtors regain solvency during extended bankruptcy proceedings. This is one such case. Ultra Petroleum Corp. (HoldCo) and its affiliates, including its subsidiary Ultra Resources, Inc. (OpCo), entered Chapter 11 bankruptcy deep in the hole. But during the bankruptcy process, these debtors (collectively, Ultra) hit it big—as natural gas prices soared, they became supremely solvent. What, then, of their debt and interest must they (re)pay their creditors now that they can?
Ultra proposed a $2.5 billion bankruptcy plan. It provided that OpCo's creditors would be paid—in full and in cash—their outstanding principal [**3] and all interest that had accrued before bankruptcy, plus interest on both at the Federal Judgment Rate for the duration of the bankruptcy proceeding. Two groups of creditors complain that the plan falls some $387 million short: They contend that they are entitled to a "Make-Whole Amount," a lump sum calculated to give them the present value of the interest payments they would have received but for Ultra's bankruptcy. These creditors further claim that they are owed post-petition interest at a contractually specified rate that is materially higher than the Federal Judgment Rate.
This case asks us to decide: first, whether the Bankruptcy Code precludes the creditors' claims for the Make-Whole Amount; second, even if it does, whether the traditional solvent-debtor exception applies; and third, whether post-judgment interest is to be calculated at the contractual or Federal Judgment rate. ] We hold that the Bankruptcy Code disallows the Make-Whole Amount as the economic equivalent of unmatured interest. But because Congress has not clearly abrogated the solvent-debtor exception, we hold that it applies to this case. And the solvent-debtor exception demands that Ultra pay what it promised [**4] now that it is financially capable. We likewise hold that, given Ultra's solvency, post-petition interest is to be calculated according to the agreed-upon contractual rate. Thus, we AFFIRM.
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
51 F.4th 138 *; 2022 U.S. App. LEXIS 28604 **; 2022 WL 8025329
IN RE: ULTRA PETROLEUM CORPORATION; KEYSTONE GAS GATHERING, L.L.C.; ULTRA RESOURCES, INCORPORATED; ULTRA WYOMING, INCORPORATED; ULTRA WYOMING LGS, L.L.C.; UP ENERGY CORPORATION; UPL PINEDALE, L.L.C.; UPL THREE RIVERS HOLDINGS, L.L.C.; Debtors, ULTRA PETROLEUM CORPORATION; KEYSTONE GAS GATHERING, L.L.C.; ULTRA RESOURCES, INCORPORATED; ULTRA WYOMING, INCORPORATED; ULTRA WYOMING LGS, L.L.C.; UP ENERGY CORPORATION; UPL PINEDALE, L.L.C.; UPL THREE RIVERS HOLDINGS, L.L.C., Appellants, versus AD HOC COMMITTEE OF OPCO UNSECURED CREDITORS; OPCO NOTEHOLDERS; ALLSTATE LIFE INSURANCE COMPANY; ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK, Appellees.
Prior History: [**1] Appeal from the United States Bankruptcy Court for the Southern District of Texas. USBC No. 4:16-MC-3064.
In re Ultra Petroleum Corp., 624 B.R. 178, 2020 Bankr. LEXIS 2999, 2020 WL 6276712 (Bankr. S.D. Tex., Oct. 26, 2020)
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Bankruptcy Law, Bankruptcy, Claims, Allowance of Claims, Civil Procedure, Remedies, Judgment Interest, Judicial Review, Standards of Review, De Novo Standard of Review, Contracts Law, Damages, Types of Damages, Liquidated Damages, Procedural Matters, Governments, Legislation, Interpretation, Procedural Matters, State Insolvency Laws, Courts, Judicial Precedent, Evidence, Burdens of Proof, Allocation, Reorganizations, Plans, Impairment of Claims, Plan Confirmation, Plan Confirmation, Cramdowns, Prerequisites, Fairness Requirement