Rapisardi, Zujkowski Co-Author NYLJ Article on Enforceability of Prepayment Premiums

March 07, 2014 The article “Fifth Circuit Addresses Enforceability of Prepayment Premiums,” which was co-written by O'Melveny & Myers partner John Rapisardi and counsel Joseph Zujkowski was published in New York Law Journal on March 6, 2014.  The piece focuses on the enforceability of prepayment premiums in light of a recent Fifth Circuit ruling in the case In re Denver Merchandise Mart.  The article discusses the Fifth Circuit’s affirmation of an order from the US Bankruptcy Court for the District of Texas rejecting the US$1.8 million portion of a secured creditor’s claim that constituted a prepayment premium under an accelerated US$30 million promissory note.  The authors note that the ruling is consistent with recent decisions from other jurisdictions, reflecting “a hesitancy on the part of bankruptcy courts to enforce prepayment premiums absent explicit language in prepetition debt instruments mandating payment of such premiums following commencement of a bankruptcy case or acceleration occasioned by another event of default.”

Rapisardi is co-chair of O'Melveny's Global Restructuring Practice, of which Zujkowski also is a member.  They reside in the Firm’s New York office.  New York associate Matthew Kremer also assisted in the preparation of the article.