ComputerShare Trust Company, N.A. and Computer Share Trust Company of Canada v. Energy Future Intermediate Holding Company LLC and EFIH Finance, Inc., No. 14-50405 (CSS) (Bankr. D. Del. Oct. 29, 2015); In re Energy Future Holdings Corp., et al., No. 14-10979 (CSS) (Bankr. D. Del. Oct. 30, 2015).
In a pair of decisions in the Energy Future Holdings bankruptcy case issued in October 2015, Judge Christopher S. Sontchi of the Bankruptcy Court for the District of Delaware held that identical language in a Second Lien Indenture and PIK Indenture governed by New York law did not entitle noteholders to make-whole claims after the debt automatically accelerated upon the debtors’ bankruptcy filing. Several months earlier, Judge Sontchi held that similar language in the First Lien Indenture also did not require payment of a make-whole premium.
As compared to the First Lien Indenture, the Second Lien and PIK Indentures state (differing language emphasized):
[I]n the case of an Event of Default arising under clause (6) or (7) of Section 6.01(a) hereof, all principal of and premium, if any, interest (including Additional Interest, if)
and any other monetary obligationson the outstanding Notes shall be due and payable immediately without further action or notice.
Just as in his prior make-whole decision, Judge Sontchi looked to Judge Robert Drain’s opinion in In re MPM Silicones, LLC (Momentive), which analyzed identical “premium, if any” language and found it to be insufficient to trigger a claim for a make-whole premium. Under Momentive’s reasoning, which Judge Sontchi once again embraced, “there are only two ways to receive a make-whole upon acceleration under New York law: (i) explicit recognition that the make-whole would be payable notwithstanding the acceleration, or (ii) a provision that requires the borrower to pay a make-whole whenever debt is repaid prior to the original maturity.”
Judge Sontchi’s recent opinions reiterate the emerging consensus that clear and unambiguous language is required for payment of a make-whole premium upon the automatic acceleration of debt.