Treatment of Make-Whole and No-Call Provisions in Bankruptcy After Ultra Petroleum

Navigating the Circuits on Prepayment Premium Provisions; Guidance for Drafting Loan Documents and Indentures

Recording of a 90-minute premium CLE webinar with Q&A

Conducted on Tuesday, April 30, 2019

Recorded event now available

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Program Materials

This CLE webinar will provide bankruptcy and lender counsel with a review of the recent In re Ultra Petroleum case from the Fifth Circuit, highlighting conflicts in the relevant case law and emerging theories regarding both enforceability of make-whole and no-call provisions in bankruptcy loan agreements and protection of entitlement to make-whole premiums.


Make-whole provisions, or yield premiums, protect the fixed-rate noteholder's rights by requiring compensation for the damage caused by the issuer’s early payment in a lower-rate market. While the clauses generally are enforceable outside of bankruptcy proceedings, their enforceability under Title 11 is a subject of considerable dispute. In part this is because of a split in the decisions as to whether a prepayment premium is disallowable as “unmatured interest” under Section 502(b)(2), and in part it arises from the text of certain clauses that gave rise to the premium on “redemption,” or otherwise left it unclear whether the premium was triggered.

In October 2018, the U.S. Supreme Court declined to review a case addressing alleged ambiguity in the text of a clause. And in January 2019, a Fifth Circuit panel issued a series of debtor-friendly rulings in a case involving no such textual ambiguity: In re Ultra Petroleum. In Ultra, the Court held that a make-whole premium, as a matter of law, is disallowable as “unmatured interest,” that a class of creditors holding make-whole premium rights may be denied those rights and stripped of a vote in Chapter 11 by “unimpairing” the class, and remanded to the Bankruptcy Court to determine whether the solvent-debtor exception survived enactment of the Bankruptcy Code, and at what rate post-petition interest must be paid.

Listen as our authoritative panel analyzes various theories employed by bankruptcy courts in considering the enforceability of make-whole provisions. The panel will review recent bankruptcy case law developments and offer best practices for lenders to protect these claims.



  1. Overview
  2. Make-whole provisions in fixed-rate lending
    1. The concept and basic formula
    2. Enforceability as a matter of state law
  3. No-call provisions
    1. Enforceability of no-calls
  4. Critical issues in bankruptcy involving make-wholes (and no-calls)
    1. Is it triggered?
    2. Is the claim disallowed as “unmatured interest”?
    3. May the class be “unimpaired” and the claim disallowed?
  5. Practical implications: drafting the clause
  6. Summary of case law and trends


The panel will review these and other key issues:

  • What factors do bankruptcy courts consider in analyzing the enforceability of make-whole and no-call provisions in loan agreements?
  • What are best practices for counsel to lenders and bondholders to protect entitlement to make-whole premiums?
  • What lessons can you take from Ultra Petroleum and other bankruptcy litigation rulings?


Millar, James
James H. Millar

Drinker Biddle & Reath

Mr. Millar has more than 20 years of experience in bankruptcy law and corporate restructuring. He represents...  |  Read More

Willett, P. Sabin
P. Sabin Willett

Morgan Lewis & Bockius

Mr. Willett tries cases, adversary proceedings and contested matters, and argues appeals, largely in disputes...  |  Read More

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