The Emperor’s New Clothes and § 502(b)’S Unmatured Interest Rule

Authors

Jacob M. Hansen

Abstract

When it comes to claims for unmatured interest—most notoriously make-whole provisions—the text of the Bankruptcy Code does not necessarily say what everyone says it does. The common interpretation is that the Code requires courts to disallow all claims for unmatured interest except those involving an oversecured creditor. This Note presents an alternative reading that resolves conflicts within the Code, moves away from unreliable legislative history, and reconciles circuit splits on the enforceability of make-whole provisions and unmatured interest claims in general. As discussed in this Note, this alternative reading is the more accurate one—especially from a textualist perspective.

Due to philosophical and practical problems that often arise when courts enforce claims for unmatured interest, this Note further argues that the Code does not do enough to limit such claims. Although it resolves interpretive issues, this alternative reading of § 502(b) does not solve the underlying policy problems. This Note therefore proposes an amendment to § 502 that would provide courts with the textual direction to dismiss all claims for unmatured interest not explicitly protected elsewhere in the Code.

Rights

© 2025 Brigham Young University Law Review

Recommended Citation

Jacob M. Hansen, The Emperor’s New Clothes and § 502(b)’S Unmatured Interest Rule, 50 BYU L. Rev. 829 (2025).
Available at: https://digitalcommons.law.byu.edu/lawreview/vol50/iss3/10