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commencement and later settlement of the state court preference action had the effect of making the liability on the guaranty obligation contingent as of the petition date. Under the terms of section 502(b), said the panel, such a claim should not be disallowed merely because it was contingent as of the petition date. The released guaranty obligation was, therefore, "revived."
* Branch Banking & Trust Co. v. McDow (In re Garriock), 373 B.R. 814
(E.D. Va. Aug. 2007) (Payne, J.) Bankruptcy court ordered trustee to use the "federal judgment rate" for post-petition interest on unsecured claims against solvent bankruptcy estate. After the chapter 11 case was converted to chapter 7, and after the court determined that the estate was solvent, the U.S. Trustee sought court approval to pay the holder of four unsecured claims post-petition interest at the federal judgment rate as set by 28 U.S.C. S 1961(a). The court first noted that the ambiguous language of section 726(a)(5) ("legal rate") left open the question of which rate to apply -- pre-petition contract rate or the federal judgment rate. The court found the latter to be more appropriate. The use of a uniform "legal rate" in favor of varying pre-petition contract rates, reasoned the court, would promote equal treatment of similarly situated creditors -- i.e., all unsecured creditors.
* In re Electric Machinery Enters., Inc., 371 B.R. 549 (Bankr. M.D. Fla. July 2007) (Williamson, J.)
Post-petition fees for unsecured creditors: What of the Supreme Court's ruling in Travelers? To resolve any doubt, this bankruptcy court expressly adhered to the long-standing majority view that unsecured creditors are not entitled to include post-petition attorney fees and costs in their claims. The court listed four reasons for its conclusion: (1) the plain language of section 506(b); (2) the plain language of section 502(b); (3) the Supreme Court's prior rulings, see, e.g., United Savings Association v. Timbers, 484 U.S. 365, 108 S.Ct. 626, 98 L.Ed.2d 140 (1988), and (4) other policy reason, such as the potential for inequality between unsecured creditors -- e.g., contractual claimants could get attorney fees, but tort victims could not. Thus, to resolve any doubt cast upon the issue by Travelers Casualty & Surety Co. of America v. Pacific Gas & Electric Co., --- U.S. ----, 127 S.Ct. 1199, 167 L.Ed. 178 (2007), the court declined to allow the unsecured creditor's claim for post-petition attorney fees incurred in defending the debtor's objection to its original claim.
* Nat'l Energy & Gas Transmission, Inc. v. Liberty Electric Power, LLC (In re Nat'l
Energy & Gas Transmission, Inc.), 492 F.3d 297 (4th Cir. July 2007) (Shedd, J.)38 Creditor of both debtor and non-debtor was not entitled to post-petition interest. The debtor rejected an executory contract, and the creditor filed a claim for damages under the contract termination, which was fixed by an arbitration award. The court held that a non-debtor
38 The precedential value of this opinion may be limited, as three separate opinions were filed for this case -- the opinion of the court, a concurrence, and a dissent.
