Free Order - District Court of Delaware - Delaware

Case 1:O7—cv—OO212-JJF Document 16 Filed 03/28/2008 Page 1 of 2
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
IN RE: :
: Chapter II
FOAMEX INTERNATIONAL INC., ; Case No. 05—I2685—KG
Reorganized Debtor. ;
THE BANK OF NEW YORK, AS Z
INDENTURE TRUSTEE, :
Appellant, ;
v. Z Civil Action No. 07—2I2—JJF
FOAMEX INTERNATINOAL INC., E
Appellee. ;
ERRATA ORDER
WHEREAS, the Court issued a Memorandum Opinion (D.I. I3) on
February 28, 2008, in the above—captioned action, which contained
a clerical error;
NOW THEREFORE, IT IS HEREBY ORDERED that a revised page I of
the Memorandum Opinion, as attached hereto, will be substituted
for the page containing the error.
March gg, 2008 rg Ci DATE UNITE? ST TE` DISTRICT DGE

Case 1 :O7—cv—0O212-JJF Document 16 Filed 03/28/2008 Page 2 of 2
Q,.ié‘mL (\ 'U, 'Lrr Q
Faé·}aan)§’Dist§£ct J(ud§e-/TA- .
Pending before the Court is an appeal from the March 23,
2007 Order Denying The Request Of The Bank Of New York, As
Indenture Trustee, To Compel The Reorganized Debtors To Pay Post-
Maturity Compound Interest On The 2005 Notes (the “Order") issued
by the United States Bankruptcy Court for the District of
Delaware (the “Bankruptcy Court"). For the reasons discussed,
the Court will reverse the Bankruptcy Court’s Order.
I. THE PARTIES' CONTENTIONS
By its appeal, Appellant, The Bank of New York (“BNY")
contends that the Bankruptcy Court erred in concluding that the
Indenture dated December 23, 1997 (the “2005 Notes Indenture")
did not require the Reorganized Debtors to pay BNY post—maturity
interest on overdue installments of interest (“compound
interest") as a result of the Reorganized Debtor’s payment
default. BNY contends that under New York law, if a note
provides for interest to accrue on an unpaid balance, then
interest continues to accrue in the manner set forth in the note
after the stated maturity date and until the outstanding
principal balance is paid. BNY contends that the Reorganized
Debtors failure to pay principal on the August 15, 2005 maturity
date triggered the default rate of 14.5% interest on outstanding
principal and missed interest payments. Because the 2005 Notes
were left unimpaired under the Debtors’ confirmed Second Amended
Joint Plan of Reorganization under Chapter 11 of the Bankruptcy