In re King Resources, Inc.
United States Court of Appeals for the Tenth Circuit
528 F.2d 789 (1976)
- Written by Heather Whittemore, JD
Facts
An involuntary petition in bankruptcy was filed against King Resources Company (King) (debtor). At the time, King’s unsecured creditors included senior lenders and debenture holders (creditors). The debenture holders had signed a subordination provision agreeing to subordinate their claims against King to the claims of the senior lenders. However, the subordination provision did not provide that the debenture holders’ claims would be subordinate to the senior lenders’ demands for postpetition interest—interest on a claim against a debtor after a bankruptcy petition has been filed—from King. The senior lenders argued that under the subordination provision, their demands for postpetition interest should be prioritized over the debenture holders’ claims against King. The district court held that the senior lenders could not collect postpetition interest from King. The senior lenders appealed.
Rule of Law
Issue
Holding and Reasoning (McWilliams, J.)
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