Lost in Translation: Till v. SCS Credit Corp. and the Mistaken Transfer of a Consumer Bankruptcy Repayment Formula to Chapter 11 Reorganizations


This Article argues that courts overseeing chapter 11 cases have
been mistakenly invoking the Supreme Court’s 2004 decision in Till
v. SCS Credit Corp.—which specified a consumer-friendly formula
for setting the interest rate on the remaining payments on a loan that
financed a used pickup truck—at the expense of over a century of
Supreme Court precedents that established the contrastingly creditorfriendly
“fair and equitable” standard for repayment of business
debts, as well as disregarding a clear statutory distinction between
the present value tests in chapters 11 and 13. This Article also
discusses the controversial 2014 decision in Momentive Performance
Materials and is particularly helpful in light of the recent publication
by the ABI Commission to Study the Reform of Chapter 11 of its
voluminous 2012–2014 Final Report and Recommendations. That
Report concludes, with little explanation, that Till should not be
applied in chapter 11 cases. This Article provides a detailed
justification of that position, serving as a guide for judges who are
tasked with analyses of chapter 11 cramdown interest rates and
assisting those practitioners who would argue that application of the
Till “prime-plus” formula violates existing “fair and equitable”
jurisprudence. This Article also provides academics with additional
historical and jurisprudential background concerning Till in the
consumer bankruptcy context.

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Fordham Journal of Corporate & Financial Law