The bankruptcy court previously disallowed GCAP pre-petition interest on its claim related to a commercial real estate transaction pursuant to 11 U.S.C. § 502 and post-petition interest pursuant to 11 U.S.C. § 506. On appeal, the district court affirmed the disallowance of post-petition interest, but remanded this matter to the bankruptcy court
regarding pre-petition interest, holding that such denial must be based on a specific section of 11 U.S.C. § 502 or North Carolina state law, either statutorily or if the equitable bases for denial of such interest was clearly recognized.
On remand, the Parkers argued that the pre-petition interest should be disallowed both as unconscionable and due to a lack of notice regarding default and the acceleration of the note. GCAP argued that no court had ever disallowed an interest rate in a commercial loan due as unconscionable. The bankruptcy court held that, without foreclosing the possibility of facts in other cases supporting such a defense, here the Parkers did not demonstrate that it applied in their case. Regarding notice of default and accrual of interest, the bankruptcy court also found that GCAP had provided notice. Lastly, as an over secured creditor, GCAP was entitled to attorneys fees under 11 U.S.C. § 506(b), including for its partially successful appeal.
Had this been a residential mortgage, rather than a commercial loan, N.C.G.S. § 45-90 et seq. (and potentially Rule 3002.1) would have applied and likely precluded GCAP from its attorney’s fees.
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