484 U. S. 365
January 20, 1988
An apartment landlord was given a loan of over $4 million, and the apartment complex he owned was to be used as collateral, even though it’s total value was somewhat less than the loan. A few years later, the landlord filed for bankruptcy, which automatically prevents any loaner from foreclosing on the collateral (i.e. the apartment). Under a provision in the bankruptcy code, the loaner asked the apartment owner to pay large sums of interest for the duration of the bankruptcy proceedings. The question was whether the code allowed for this when the collateral was less than loan amount.
In a mercifully unanimous decision, Scalia said the code did not allow for the imposition of interest payments in that situation. In all honesty, I could barely make heads or tails of the opinion, so if you want a better summary you’ll have to read it yourself. Basically, he thought the creditor’s reading of the code was inconsistent with other code provisions, and that the provisions the creditor relied upon for the support weren’t very strong. Finally, Scalia tried to demonstrate that the ruling was in line with the intent of Congress. As I’ve noted before, decisions involving securities, banking, and high finance are absolutely brutal for me. I just hope that I don’t run into too many cases like this as I continue through the Rehnquist Court.