In re: Bank of New England Corp., No. 10-1456 (1st Cir. 2011)
Annotate this CaseFollowing a remand from the First Circuit, the bankruptcy court approved the Chapter 7 trustee's decision to give priority to holders of senior unsecured debt with respect to principal and pre-petition interest. The priority did not extend to payment of post-petition interest ahead of junior unsecured debt. The district court affirmed. The First Circuit affirmed. The Code provides that a subordination agreement is enforceable to the same extent that such agreement is enforceable under applicable nonbankruptcy law, (11 U.S.C. 510(a)). The bankruptcy court findings as to the intent of the parties were sufficient to support the conclusion, under New York law, that the parties did not intend to subordinate the junior noteholders to post-petition interest.
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