PRECEDENTIAL

        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT
                  ___________

                  No. 23-1169 & 23-1170
                       ___________

            In re: The Hertz Corporation, et al.,
                    Reorganized Debtors

       Wells Fargo Bank, N.A., as Indenture Trustee

                                                    Appellant
                             v.

   The Hertz Corporation; Dollar Rent A Car, Inc.; Dollar
Thrifty Automotive Group, Inc.; Donlen Corporation; DTG
  Operations, Inc.; DTG Supply, LLC; Firefly Rent A Car
     LLC; Hertz Car Sales LLC; Hertz Global Services
Corporation; Hertz Local Edition Corp.; Hertz Local Edition
Transporting, Inc.; Hertz System, Inc.; Hertz Technologies,
Inc.; Hertz Transporting, Inc.; Rental Car Group Company,
LLC; Smartz Vehicle Rental Corporation; Thrifty Car Sales,
 Inc.; Thrifty, LLC; Thrifty Insurance Agency, Inc.; Thrifty
   Rent A Car System, LLC; and TRAC Asia Pacific, Inc.

   U.S. Bank National Association, as Indenture Trustee

                             v.

                  The Hertz Corporation
      Appeal from the United States Bankruptcy Court
                for the District of Delaware
                      (No. 21-50995)
      Bankruptcy Judge: Honorable Mary F. Walrath


               Argued on October 25, 2023

 Before: KRAUSE, PORTER, and AMBRO, Circuit Judges

            (Opinion filed September 10, 2024)

Donald Burke
John B. Goerlich
Wilkie Farr & Gallagher
1875 K Street, NW
Washington, DC 20006

Daniel Forman
Mark T. Stancil (Argued)
Rachel C. Strickland
Wilkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019




                            2
Matthew B. Lunn
Edmon L. Morton
Joseph M. Mulvihill
Young Conaway Stargatt & Taylor
1000 N. King Street
Rodney Square
Wilmington, DE 19801

            Counsel for Appellant Wells Fargo Bank, NA


Christopher Fong
Nixon Peabody
55 W. 46th Street
Tower 46
New York, NY 10036

Richard C. Pedone
Nixon Peabody
53 Exchange Place
Boston, MA 02109

Kevin S. Mann
Michael L. Vild
Cross & Simon
1105 N. Market Street
Suite 901, P.O. Box 1380
Wilmington, DE 19899

            Counsel for Appellee US Bank, NA




                           3
Paul D. Clement (Argued)
Mariel A. Brookins
C. Harker Rhodes, IV
Clement & Murphy
706 Duke Street
Alexandria, VA 22314

Aaron Colodny
White & Case
555 S. Flower Street
Suite 2700
Los Angeles, CA 90071

Thomas E. Lauria
White & Case
200 S. Biscayne Boulevard
Suite 4900
Miami, FL 33131

David M. Turetsky
White & Case
1221 Avenue of the Americas
New York, NY 10020

Jason N. Zakia
White & Case
111 S. Wacker Drive
Suite 5100
Chicago, IL 33130




                              4
Ricardo Palacio
Ashby & Geddes
500 Delaware Avenue
P.O. Box 1150, 8th Floor
Wilmington, DE 19899

              Counsel for Appellee Hertz Corp.

                     ________________

                 OPINION OF THE COURT
                    ________________


AMBRO, Circuit Judge

       Bankruptcy is a lesson in leverage. It involves money
and to whom it goes. The more advantage (leverage) a party
has, the more it influences who gets paid. In a Chapter 11 case,
the parties with more leverage control the reorganization, while
those with less often must sit on the sidelines and await their
fate. The debtors here, able to pay their creditors in full,
believe they have the leverage to deny their unsecured
noteholders more than a quarter billion dollars of interest they
promised to pay pre-bankruptcy, all while giving lower priority
equityholders four times that amount. Does the Bankruptcy
Code, 

 et seq.,1 give the debtors enough
leverage to do that?




1
  Unless otherwise noted, citations to § <•> are to the
Bankruptcy Code.




                               5
        The debtors say so because of the Bankruptcy Code’s
general rule barring interest accruing post-petition (in
bankruptcy lingo, “unmatured interest”). That is one way the
Code deals with the difficult distributional problems of the
typical case, where there is not enough money to go around.
But this is not the typical case. At the end of the
reorganization, the debtors here were so flush that they paid
their former stockholders (the “Stockholders”) roughly $1.1
billion. While the parties agree that the Code requires debtors
to pay post-petition interest if they are solvent, they disagree
whether this entitles creditors to post-petition interest at the
federal judgment rate or the contract rate—a dispute with teeth,
because the latter exceeds the former by more than 30 times in
this case.

        What happened here is that the Hertz Corporation and
certain affiliates (collectively, “Hertz”), crippled by the
COVID pandemic, filed for protection under Chapter 11 of the
Bankruptcy Code in May 2020. To give a sense of its then-
bleak prospects, Hertz warned in an SEC filing of “a significant
risk that the [Stockholders] will receive no recovery under the
Chapter 11 [c]ases and that our common stock will be
worthless.”       Hertz Glob. Holdings, Inc., Prospectus
Supplement (to Prospectus Dated June 12, 2019) S-4 (2020),
https://perma.cc/9RJE-R6KT (June 15, 2020).

       As the economy recovered, however, so did Hertz’s
financial prospects. It emerged from bankruptcy a year later
via a confirmed plan of reorganization (the “Plan”) that sold
the company to a group of private equity funds. The Plan
promised to leave all of Hertz’s creditors unimpaired—in other
words, it would not alter any of their rights. (Compare that to
a normal bankruptcy plan, which typically discharges




                               6
creditors’ claims for cents on the dollar.) Therefore, none of
Hertz’s creditors could vote on the Plan; as a matter of law,
they were all conclusively presumed to accept it.

        To be precise, the Plan paid off Hertz’s pre-petition
debt, including unsecured bonds maturing biennially from
2022 to 2028 (the “Notes”). But the Plan did not pay holders
of the Notes (the “Noteholders”2) contract rate interest for
Hertz’s time in bankruptcy. Instead, it paid interest for that
period at the much lower applicable federal judgment rate.
Hertz also did not pay the Noteholders certain charges
provided in the Notes, specifically, variable fees (calculated
using financial formulas) designed to compensate lenders for
their lost profits when a borrower pays them back ahead of
schedule. These fees are generically called make-wholes. (To
distinguish between make-wholes generally and the particular
make-whole fees at issue here, we call the latter the
“Applicable Premiums”—their title under those Notes.) If
Hertz had redeemed the Notes in mid-2021 without filing for
Chapter 11, it would have owed the Noteholders the

2
  Wells Fargo Bank, National Association is nominally the
appellant here, not the Noteholders. It participates only in its
capacity as indenture trustee under the Notes. As the real
parties in interest are the Noteholders, we instead refer to them
in this opinion.

U.S. Bank National Association also appeals in its capacity as
indenture trustee for other unsecured notes; its only issue is
whether Hertz should have paid post-petition interest on its
notes at their contract rate rather than the federal judgment rate.
Beyond adopting the arguments made by the Noteholders, it
did not offer any arguments of its own.




                                7
Applicable Premiums and contract rate interest, combined
totaling more than $270 million. The savings effectively went
to the Stockholders: The Plan gave them roughly four times
that amount in a combination of cash and equity in the
reorganized Hertz. The Noteholders, unsurprisingly, object to
that result.

       Among the issues we address are two questions of
bankruptcy law unresolved in this Circuit: Does § 502(b)(2)’s
prohibition on claims “for unmatured interest” cover make-
whole fees like the Applicable Premiums, and does the
Bankruptcy Code as a whole require solvent debtors to pay
unimpaired creditors interest accruing post-petition at the
contract rate?3

       Hertz argues that make-whole fees are the economic
equivalent of interest and must be disallowed under
§ 502(b)(2). It concedes, however, that the Bankruptcy Code
requires solvent debtors to pay unimpaired creditors like the
Noteholders post-petition interest, but, in its view, only at the
federal judgment rate. So the company tells us the Noteholders
received everything they were entitled under the Code.




3
  Throughout this opinion, we refer to contract rate interest.
But we really mean the applicable non-bankruptcy rate,
whatever it may be. See, e.g., Ad Hoc Comm. of Holders of
Trade Claims v. Pac. Gas & Elec. Co. (In re PG&E Corp.), 

, 1064 (9th Cir. 2022) (solvent debtor exception may
require award of “contractual or state law default” interest).
Hertz does not contest the Notes’ validity under governing
state law (New York), hence our use of the contract rate here.




                               8
        The Noteholders disagree. They claim the Applicable
Premiums should not be disallowed as unmatured interest
because they do not fit the dictionary definition of that term.
In any event, they say that pre-Bankruptcy Code caselaw
grants them an equitable right to payment in full (i.e., both
contract rate interest and the Applicable Premiums) because
Hertz is solvent. So, since the confirmed Plan classified them
as unimpaired, they must receive interest at the contract rate.
Per the Noteholders, if we side with Hertz and cancel the
otherwise enforceable fees and interest at issue, we will bless
an outcome anathema to our law—a windfall to the
Stockholders, who sit at the lowest rung of payment priority,
by letting them “pocket[] hundreds of millions of dollars that
Hertz had promised to [pay] the Noteholders” that it “could
easily afford to repay . . . in full[.]” Noteholder Br. 1. They
reject Hertz’s view that we are addressing only subtleties of
insolvency law and see this dispute as more fundamental.

        We determine that the Applicable Premiums must be
disallowed under § 502(b)(2), for they fit both the dictionary
definition of interest and are its economic equivalent. But we
agree with the Noteholders that they have a right to receive
contract rate interest and the Applicable Premiums because
Hertz was solvent. Thoughtful opinions issued by the Fifth and
Ninth Circuits in quite similar cases support the Noteholders.
Ultra Petroleum Corp. v. Ad Hoc Comm. of Opco Unsecured
Creditors (In re Ultra Petroleum Corp.), 

 (5th Cir.
2022), cert. denied, 

 (2023); Ad Hoc Comm. of
Holders of Trade Claims v. Pac. Gas & Elec. Co. (In re PG&E
Corp.), 

 (9th Cir. 2022), cert. denied, 

                           9
2492 (2023).4 We end as they do, though for us the primary
support for that result is in absolute priority, “bankruptcy’s
most important and famous rule[.]” Czyzewski v. Jevic
Holding Corp., 

 (2017) (quoting Mark J. Roe
& Frederick Tung, Breaking Bankruptcy Priority: How Rent-
Seeking Upends the Creditors’ Bargain, 

,
1236 (2013)). Allowing Hertz to cancel more than a quarter
billion dollars of interest otherwise owed to the Noteholders,
while distributing a massive gift to the Stockholders, would
impermissibly “deviate from the basic priority rules . . . the
Code establishes for final distributions of estate value in
business bankruptcies.” Jevic, 

.

                           I. Background

                       A. Procedural History

        Hertz’s Plan proposed to pay the Noteholders about
$2.7 billion, reflecting the Notes’ principal, contract rate
interest that accrued before Hertz filed for bankruptcy, post-
bankruptcy interest at the federal judgment rate (as applied in
this case, 0.15% annually), and certain other fees. It would not
pay them post-petition interest at the contract rate or any fees
for redeeming the Notes early, including the Applicable
Premiums. The Plan offered the Stockholders a package of

4
  The parties never cite the Second Circuit’s ruling in In re
LATAM Airlines Group S.A., which also examined post-
petition interest in solvent debtor cases. 

 (2d Cir.
2022), cert. denied, 

 (2023). In our view, that
discussion was dicta, as the decision “affirm[ed] the
Bankruptcy Court’s finding that [the debtor] was insolvent.”

.




                              10
stock, warrants, and cash that it valued in the aggregate at
around $1.1 billion. App. 1514-15; Bankr. D.I. 4759 at 12, 18-
19.5

        Hertz and the Noteholders were aware of their disputes
about contract rate interest and early redemption fees but did
not let those issues delay emergence from Chapter 11. Instead,
the Plan designated the Noteholders unimpaired, reserved their
right to litigate their disagreements post-confirmation, and
committed to pay whatever was necessary to ensure they were
unimpaired under the Plan. The Noteholders were not allowed
to vote on the Plan because, as unimpaired creditors, they were
conclusively presumed to accept it. § 1126(f). The Plan was
confirmed in early June 2021, and Hertz emerged from
Chapter 11 later that month.

        In July 2021, the Noteholders filed a complaint seeking
payment of post-petition interest at the contract rate, the
Applicable Premiums, and the flat fees for early redemptions
found in the 2022 and 2024 Notes. The Bankruptcy Court
dismissed their claims for contract rate interest. It concluded
that, as unimpaired creditors of a solvent debtor, they were
entitled to interest at the “legal rate,” per §§ 1129(a)(7)(A)(ii)
& 726(a)(5), and that rate is the federal judgment rate. The
Court rejected the Noteholders’ argument that a “solvent
debtor exception,” following from pre-Bankruptcy Code

5
  Specifically, the Plan offered the Stockholders $1.53 in cash
per share (with approximately 156 million shares outstanding,
that was about $240 million), 3% of reorganized Hertz’s equity
(valued at $141 million), and warrants for further equity that
the Plan estimated were worth $769 million. Bankr. D.I. 4759
at 12, 18-19.




                               11
caselaw, required Hertz to pay them interest at the contract rate.
It also dismissed their claims for flat redemption fees on the
2022 and 2024 Notes because those fees were not triggered as
a matter of contract law. But over Hertz’s objection, it
concluded the opposite as to the Applicable Premiums. While
Hertz also argued those Premiums were disallowed by
§ 502(b)(2)’s prohibition on claims for unmatured interest, the
Bankruptcy Court did not then resolve that issue. Whether the
claims were for interest for purposes of § 502(b)(2), it
explained, was a “factual” question that required record
development. App. 31.

        After discovery, Hertz and the Noteholders cross-
moved for summary judgment on that issue. Because the
Bankruptcy Court concluded that the “economic substance” of
the Applicable Premiums was interest, it disallowed the claims
of the Noteholders. App. 73. They moved for reconsideration
on post-petition interest in light of the intervening decisions in
Ultra and PG&E, which both required solvent debtors to pay
unimpaired creditors post-petition interest at the contract rate.
The Bankruptcy Court did not change its mind: It had
“considered all [the] arguments” on post-petition interest “and
simply reached a different conclusion from that reached by the
Fifth and Ninth Circuits.” App. 77. It then sua sponte certified
its decision for direct appeal to us. 

(d)(2). We
agreed to review the appeal rather than requiring the parties to
proceed first in the District Court.

       The Noteholders ask us to reverse the Bankruptcy Court
by ruling that Hertz owes them the fixed redemption fee on the
2024 Notes, the Bankruptcy Code does not prohibit payment
of the Applicable Premiums, and (as unimpaired creditors of




                               12
the very solvent Hertz) they are entitled to post-petition interest
at the contract rate.

                B. Jurisdiction, Standard of Review

       We have jurisdiction under 

(d). The
Bankruptcy Court’s rulings on Hertz’s motion to dismiss and
the cross-motions for summary judgment are both subject to
our plenary review. In re Klaas, 

 (3d Cir.
2017).

                          II. Analysis

                    A. The 2024 Notes’ Fee

        The Noteholders appeal the ruling that they were not
entitled to an early redemption fee on the 2024 Notes.6 Those
Notes required Hertz to pay a flat fee if they were redeemed
“after October 15, 2019 and prior to maturity[.]” App. 520.
We agree with the Bankruptcy Court; this fee was not triggered
because the 2024 Notes by their terms matured when Hertz
filed bankruptcy and their redemption followed around a year
later when it left Chapter 11.

       True, the Bankruptcy Court’s ruling allows Hertz to
redeem the 2024 Notes well before 2024 without a fee. But,
viewed in the complex context of modern leveraged finance,
that is not as “bizarre” a result as the Noteholders suggest.

6
 In their papers, the Noteholders concede that they are not
owed an early redemption fee on the 2022 Notes. Noteholder
Br. 53 n.10.




                                13
Noteholder Br. 54. Those Notes only mature early upon an
acceleration approved by the lenders or a bankruptcy filing,
which would not happen unless the lenders threatened to
accelerate. There is fierce debate whether borrowers should
pay fees in that case, and both sides have valid points.7 So this
result, likely stemming from extensive negotiations around the
terms of the 2024 Notes as a whole, is not absurd. That
background illustrates why, given our limited familiarity with
the intricacies of technical debt contracts, we should rule based
on their terms alone, not our (perhaps uninformed) views of
fairness. Cf. Cortland St. Recovery Corp. v. Bonderman, 

 (N.Y. 2018) (bonds must be enforced
“according to the plain meaning of [their] terms” (citation
omitted)). What might appear fair to an unfamiliar court could
be unfair when understood in full.

       The Noteholders also argue that certain provisions of
the 2024 Notes “refer to maturity arising ‘on acceleration’ or
‘otherwise[,]’” so maturity here must mean the day they are

7
  See Matt Levine, Bond Covenants and Skeptic Skepticism,
Bloomberg: Money Stuff (Jan. 12, 2017, 9:23 A.M.),
https://www.bloomberg.com/opinion/articles/2017-01-
12/bond-covenants-and-skeptic-skepticism; compare Adam
Cohen, The End of Covenants: The “No Premium on Default”
Language Is Spreading Like Wildfire – Your Future Covenant
Enforcement Is Being Destroyed, Covenant Rev., (Jan. 11,
2017) (claiming borrowers will abuse creditors if bonds do not
require early redemption fees upon default), with Steven A.
Cohen et al., Wachtell, Lipton, Rosen & Katz, Default Activism
in the Debt Markets (2018), https://perma.cc/82EL-PBJX
(alleging that aggressive lenders are demanding early
redemption premiums in response to technical defaults).




                               14
scheduled to mature in 2024. Noteholder Br. 54. We disagree.
The referenced sections of the 2024 Notes do not use the word
“maturity” but the defined term “Stated Maturity,” which
means “the fixed date [here, October 15, 2024] on which the
payment of principal . . . is due[.]” App. 404. That is different
from maturity, which occurs whenever a debt obligation
“become[s] due.” Mature, Black’s Law Dictionary (12th ed.
2024). And, when interpreting contracts, we read defined and
undefined terms as having distinct meanings. See Derry Fin.
N.V. v. Christiana Cos., Inc., 

, 1214-15 (3d Cir.
1986); see also Robertshaw US Holding Corp. v. Invesco
Senior Secured Mgmt. Inc. (In re Robertshaw US Holding
Corp), No. 24-90052, Adv. No. 24-03024, slip op. at 11-14
(Bankr. S.D.Tex. June 20, 2024) (deciding debt dispute on the
basis that “subsidiary” and “Subsidiary” have different
meanings in the same document).

        In sum, Hertz never promised to pay the Noteholders a
fee in this situation. Contract law does not bind parties to
promises they did not make. If the commercially sophisticated
Noteholders think this outcome is unfair, they should not have
agreed to the terms of the 2024 Notes that compel it. Cf.
Schron v. Troutman Sanders LLP, 

 (N.Y.
2013) (“[H]ad these sophisticated business entities . . . intended
[a different result], they easily could have included a provision
to that effect[.]” (citations omitted)).

                B. The Applicable Premiums

      We turn to whether the Bankruptcy Court should have
allowed the Noteholders’ claims for the Applicable Premiums,
which were triggered by Hertz’s early payoff of the 2026 and
2028 Notes when it emerged from bankruptcy in 2021.




                               15
        A bit of corporate finance knowledge is helpful here.
Many bonds—including the 2026 and 2028 Notes—pay
interest semi-annually via so-called coupons while
outstanding. So, if a bond is redeemed before its scheduled
maturity, lenders lose interest they otherwise would have
received. In a compromise, many bonds—again, including the
Notes—allow borrowers to redeem them before they are
scheduled to mature in return for a flat fee. William J. Whelan
III, Bond Indentures and Bond Characteristics in Leveraged
Financial Markets: A Comprehensive Guide to High-Yield
Bonds, Loans, and Other Instruments 171, 173 (William F.
Maxwell & Mark R. Shenkman eds., 2010). It offers some
compensation for lost interest income, but it does not attempt
to be an exact substitute. We refer to this fee as the
“Redemption Fee,” and the first date when a borrower can
redeem a bond by paying the Redemption Fee as the
“Redemption Date.” (The charge at issue for the 2024 Notes
was a Redemption Fee.) But the 2026 Notes have a
Redemption Date in August 2022 and the 2028 Notes’
Redemption Date is in January 2023. Both Redemption Dates
fall after Hertz’s redemption of the Notes in June 2021—so, by
contract, Hertz could not simply pay a Redemption Fee to rid
itself of those Notes at that time.

       However, there is another early release mechanism.
Bonds sometimes allow borrowers to pay them off before the
Redemption Date if lenders are “made whole,” i.e., if they
receive the present value of the profits they would have booked
in the alternate world where they were paid off on the
Redemption Date. These make-whole fees guarantee lenders
a minimum return, no matter how quickly a borrower pays
them back. See Davis Polk & Wardwell LLP, Creditors’
Guide to Make-Whole Enforceability in Bankruptcy 7 (2d ed.




                              16
2023), https://perma.cc/HZ2U-RL4F (a “make-whole
provision ensures that creditors receive a minimum return on
their investment . . . independent of when the debt instrument
is repaid”); In re Energy Future Holdings Corp. (EFH II), 

 (3d Cir. 2016) (make-wholes are “meant to
give the lenders the interest yield they expect” in the event of
an early redemption); In re MPM Silicones, L.L.C., 

 (2d Cir. 2017) (make-wholes provide “additional
compensation to make up for the interest [lenders] would not
receive” if bonds are redeemed early).

      As noted above, the Applicable Premiums are make-
whole fees. While their language appears complicated,8 their

8
  For readers interested in digging deeper, we offer the relevant
text from the 2026 Bonds below (the 2028 Bonds are
substantially identical).

       “Applicable Premium” means, with respect to a 2026
       Note at any Redemption Date . . .[,] the excess of (A)
       the present value at such Redemption Date, calculated
       as of the date of the applicable redemption notice, of (1)
       the redemption price of such 2026 Note on August 1,
       2022 (such redemption price being that described in
       Section 6(a)), plus (2) all required remaining scheduled
       interest payments due on such 2026 Note through such
       date (excluding accrued and unpaid interest to the
       Redemption Date), computed using a discount rate
       equal to the Treasury Rate plus 50 basis points, over (B)
       the principal amount of such 2026 Note on such
       Redemption Date . . . .

App. 662 (cleaned up).




                               17
substance is not. The Premiums are made of three parts:
interest coupons owed through the Redemption Date, the
Redemption Fee, and a present value discount.9 They seek to
ensure that Noteholders receive the return they expected for
their investment in the Notes Hertz redeemed before their
Redemption Date.

       With that background, we can now consider the parties’
positions. Hertz argues that the Applicable Premiums must be



To clarify further, the Applicable Premiums can be calculated
by summing (a) the present value of a redemption on the
Redemption Date (i.e., principal and Redemption Fee) and (b)
the present value of unaccrued interest through the Redemption
Date, and then subtracting (c) the Notes’ undiscounted
principal. Ross Hallock, The Math of Make-Wholes, Covenant
Rev., May 22, 2023, at 10. Doing some math, the Applicable
Premiums can be restated as (a) the present value of the
Redemption Fee and unpaid interest minus (b) the present
value discount applicable to the early payment of the Notes’
principal.
9
  To redeem the Notes before their scheduled maturity, Hertz
must also pay all accrued but unpaid interest. App. 662. (This
is interest for the time the Notes have been outstanding since
the last payment: for example, if Hertz paid interest on April 1
and redeemed the Notes on July 31, this would be interest from
April through July.) But because we require Hertz to pay post-
petition contract rate interest, infra Section II.C, there will be
no accrued but unpaid interest owing on the Notes after our
decision. Thus, we ignore that requirement in our discussion
above.




                               18
disallowed under § 502(b)(2)’s explicit prohibition on claims
for unmatured interest because that is exactly what they are.
By contrast, the Noteholders say the Applicable Premiums are
not interest at all. Before us, Hertz does not dispute the
Bankruptcy Court’s conclusion that it owes the Applicable
Premiums under the terms of the relevant Notes. The
Noteholders do not dispute that the Applicable Premiums did
not accrue before Hertz’s bankruptcy filing and therefore are
unmatured as a matter of bankruptcy law. Whether the
Applicable Premiums are interest is the issue here. The
Bankruptcy Court, for its part, ruled that they were interest in
“economic reality[.]” App. 73.

       Because make-whole fees are common in bonds and can
be quite large, Chapter 11 debtors and creditors have
repeatedly and vigorously disputed whether they must be paid
in bankruptcy. See, e.g., Ultra, 

 (challenge to
$201 million make-whole); EFH II, 

 ($431
million make-whole); MPM, 

 (nearly $200
million make-whole). Practitioners and academics have
written extensively on the subject as well, including the issue
here—whether make-whole fees must be disallowed under
§ 502(b)(2) as “unmatured interest[.]”10

10
  We found many articles on the subject helpful, including the
pieces below (ordered by publication date): Scott K. Charles &
Emil A. Kleinhaus, Prepayment Clauses in Bankruptcy, 

 (2007); Patrick M. Birney,
Toward Understanding Make-Whole Premiums in Bankruptcy,
24 Norton J. of Bankr. L. and Prac., no. 4, 2015; Bruce A.
Markell, “Shoot the . . .”: Holes in Make Whole Premiums, 36
Bankr. L. Letter, no. 5, 2016; Sam Lawand, Make-Whole
Claims in Bankruptcy, 27 Norton J. of Bankr. L. and Prac., no.




                              19
        There are two common approaches to this question.
One suggests that the appropriate analysis is whether a make-
whole fee best fits within dictionary and caselaw definitions of
interest. See, e.g., In re Trico Marine Servs., Inc., 

 (Bankr. D. Del. 2011). The other approach,
reflecting a concern that the definitional test puts form over
substance, asks whether the make-whole at issue is the
economic equivalent of interest. Ultra, 

(warning the definitional approach is “susceptible to easy end-
runs by canny creditors”).

        The Bankruptcy Court used the latter approach,
concluded the Applicable Premiums are the economic
equivalent of interest, and disallowed the Noteholders’ claims.
Hertz backs that rationale to us. The Noteholders primarily
argue that the Applicable Premiums are not interest using the
definitional approach, though they also disclaim any economic
equivalency.11 To us, the Applicable Premiums are interest


4, 2018; Bruce A. Markell, Dead Funds and Shipwrecks: Ultra
Petroleum, 39 Bankr. L. Letter, no. 4, 2019; Douglas G. Baird,
Making Sense of Make-Wholes, 94. Am. Bankr. L.J. 567
(2020).
11
  The Noteholders also cite non-bankruptcy cases concluding
that prepayment penalties are not interest. They particularly
draw our attention to Prudential Ins. Co. of Am. v. Comm’r of
Internal Revenue, 

 (3d Cir. 1989), where we
“reject[ed the] position that prepayment charges are interest
equivalents.” Appealing language, but on further review the
case is not relevant—the question was whether “prepayment
charges upon the retirement of certain corporate mortgages
should be characterized as long-term capital gain” or interest




                              20
under both approaches, though they must be disallowed under
§ 502(b)(2) if they fit under either. We handle each in turn.

        The Noteholders’ implicit definitional argument, boiled
down, is that interest is a fee accruing while borrowed money
is used. By contrast, the Applicable Premiums do not slowly
and steadily accrue over the life of the Notes; they come into
being fully formed upon an early redemption. In their words,
the Applicable Premiums are “not compensation for Hertz’s
ongoing use of the Noteholders’ money,” one of their preferred
definitions of interest, “but rather compensation for the
termination of Hertz’s obligations to the Noteholders[.]”
Noteholder Br. 45 (emphasis omitted).

       The problem with the Noteholders’ definitional
approach is that the definitions are broader than that. Look at
their prime cases on the subject. Deputy v. du Pont defines
interest as “compensation for the use or forbearance of
money.” 

 (1940). Love v. State marks it as
“the cost of having the use of another person’s money for a
specified period[.]” 

 (N.Y. 1991).
Black’s Law Dictionary says it is “[t]he compensation fixed by
agreement or allowed by law for the use or detention of money,


for tax purposes. Id. at 833. As Prudential demonstrates,
whether a prepayment charge is interest for purposes of another
field of law does not automatically resolve the question for
bankruptcy. Subject-specific considerations irrelevant in
bankruptcy may have driven the analysis in those cases. And,
in any event, many non-bankruptcy decisions agree with our
broader view of interest. See Bruce A. Markell, “Shoot the . .
.”: Holes in Make Whole Premiums, 36 Bankr. L. Letter, no. 5,
2016 (citing cases).




                              21
or for the loss of money by one who is entitled to its use;
esp[ecially] the amount owed to a lender in return for the use
of borrowed money.” Interest, Black’s Law Dictionary (12th
ed. 2024). See Bruce A. Markell, “Shoot the . . .”: Holes in
Make Whole Premiums, 36 Bankr. L. Letter, no. 5, 2016
(collecting definitions of interest and concluding that
“payments which the lender collects for itself” above cash
actually extended are interest).

       These definitions of interest do not require that a charge
accrue daily or be contingent on “ongoing” use of money.
Contrary to the Noteholders’ claims that the Applicable
Premiums are not definitionally interest, they are
“compensation” Hertz committed to pay (upon a contingency)
in order to borrow (i.e., use) the Noteholders’ money. That the
relevant contingency occurred—redemption of the Notes and
the early return of the Noteholders’ capital—does not change
this conclusion. Cf. Ultra, 

 & n.8. To state it
even from the Noteholders’ perspective, the Applicable
Premiums are among the suite of fees they extracted from
Hertz in return for their credit. So Hertz’s commitment to pay
them was “compensation” for its use of their funds.12

12
   Supporting our conclusion, several decisions have held that
original issue discount must be disallowed under § 502(b)(2)
to the extent unmatured. See, e.g., In re Pengo Indus., 

 (5th Cir. 1992); In re Chateaugay Corp., 

 (2d Cir. 1992). It is an amount tacked on to
principal above the cash extended to a borrower. Ultra, 

 n.9. (For example, a loan with $100 of “principal”
in return for an advance of $90 has $10 of original issue
discount.) Like a make-whole, original issue discount is a
large fee that does not accrue over time—rather, it is owing




                               22
       The Noteholders also claim that the Applicable
Premiums are definitionally not interest because they reflect
the “reinvestment costs” that the Noteholders will suffer from
redeploying their capital earlier than anticipated. Noteholder
Br. 42. Presuming the Applicable Premiums perfectly match
the Noteholders’ reinvestment costs, we still conclude they
must be disallowed under the definitional approach because a
claim can simultaneously fit both the definition of interest and
something else. In re Dr.’s Hosp. of Hyde Park, Inc., 

 (Bankr. N.D. Ill. 2014) (rejecting “false dichotomy”
between describing a make-whole fee as liquidated damages or
interest “because [it] may well be both”); Ultra, 

(“interest labeled ‘liquidated damages’ is still interest” for
§ 502(b)(2) analysis). Interest by any other name does, in fact,
smell as sweet. 13




(but not due) the day funds are extended. But courts rule that
it is interest because it is “paid to compensate for the delay and
risk involved in the ultimate repayment of monies loaned.”
Chateaugay, 

.
13
   Without prejudging any case, we note that creditors are hard
at work creating new forms of make-wholes that may also be
interest by another name. See, e.g., Elizabeth R. Tabas, et al.,
Equity-Like Sweeteners Go Mainstream, Am. Bar Ass’n: Bus.
L. Today (Oct. 12, 2023), https://perma.cc/E45H-T3ZE
(discussing growth of multiple on invested capital and internal
rate of return-based make-wholes instead of “traditional”
make-wholes “expressly calculated by reference to future
interest”).




                               23
       This case is a good example. The Noteholders describe
their reinvestment costs as the losses they will suffer when
“reinvest[ing] their prepaid principal in a less-advantageous
market environment.” Noteholder Br. 42. That is, the
reinvestment costs are the unmatured interest the Noteholders
will not recover in the market.

       We also think the Applicable Premiums (which, to
repeat, are composed of interest coupons owed through the
Redemption Date, the Redemption Fee, and a present value
discount) are the economic equivalent of interest. They are
mathematically equivalent to the unmatured interest the
Noteholders would have received had Hertz redeemed the
Notes on their Redemption Dates. We take each component in
turn.

        The coupons that would come due before the
Redemption Date are no doubt interest. Applying the logic we
used above, the Redemption Fee is interest; it is a fee for the
Noteholders’ profit that Hertz agreed to as a condition for
issuing the Notes. The Bankruptcy Court reached the same
result, noting that the Redemption Fee is equal to “one semi-
annual interest payment” on the Notes. App. 74. To the
Noteholders, this is “entirely arbitrary” because a larger
Redemption Fee without a superficial similarity to a coupon
would survive under that logic. Noteholder Br. 50. But our
conclusion that the Redemption Fee is interest—because it is a
fee for the Noteholders’ ultimate return that Hertz committed
to pay in exchange for the right to use the Notes’ principal—
has nothing to do with its relationship to the Notes’ annual
interest rate: § 502(b)(2) would disallow unmatured
Redemption Fees of $0.01 and $1 billion alike.




                              24
       That leaves the significant present value discount
(accounting for early payment of principal, coupons, and the
Redemption Fee). Correctly adjusting for present value,
however, does not defeat the mathematical identity. Because
a “dollar today is worth more than a dollar tomorrow,” Ultra,

, discounts are applied to early payments to
account for risk of default and the time value of money, thus
making sure that lenders receive the benefit of their bargain—
the value they would expect to receive through a scheduled,
rather than premature, paydown. If early payments were not
discounted, lenders would receive an unjustified windfall. In
other words, accounting for present value makes the
Applicable Premiums even more mathematically equivalent to
the disallowed unmatured interest by correctly pegging its
actual worth. Applying a present value discount is not
sufficiently “transformative” to turn the sum of interest
coupons and the Redemption Fee into something other than
interest. 

       In any event, a claim for less than all the unmatured
interest owed by a debtor (like the Applicable Premiums, here
discounted by present value) is still a claim for unmatured
interest. Self-imposed discounts do not defeat § 502(b)(2).

       To sum up, § 502(b)(2) disallows a claim for unmatured
interest if it is either definitionally interest or its economic
equivalent. Because the Applicable Premiums are both, the
Bankruptcy Court correctly disallowed the Noteholders’
claims for those Premiums.




                              25
       C. Solvent Debtors and Post-Petition Interest

        Despite our holding above, does the Bankruptcy Code
as a whole nonetheless require solvent debtors to pay
unimpaired creditors interest accruing post-petition at the
contract rate? It is a technical question of bankruptcy law, and
we give that issue its nuanced due below. We can rephrase it
in a way that makes the answer predictable: Can Hertz use the
Bankruptcy Code to force the Noteholders to give up nine
figures of contractually valid interest and spend that money on
a massive dividend to the Stockholders? The answer is no. As
the Supreme Court told us more than a century ago, “the rule
is well settled that stockholders are not entitled to any share . .
. until all the debts of the corporation are paid.” Chi., Rock
Island & Pac. R.R. v. Howard, 

 (1868).

       We start, however, with the Fifth and Ninth Circuits’
decisions on which the parties spend a significant portion of
their briefs. Ultra and PG&E are close analogues, each
involving solvent debtors who sought to save immense
amounts by paying unimpaired unsecured creditors post-
petition interest at the federal judgment rate instead of the
higher rates applicable outside bankruptcy. In both cases, the
creditors won.

       The Fifth and Ninth Circuits took similar approaches to
the issue. Both Courts found in Supreme Court decisions a
requirement to respect pre-Code practice absent a clear
statement in the Bankruptcy Code, Ultra, 

;
PG&E, 46 F.4th at 1057-58, concluded that pre-Code practice
required solvent debtors pay contract rate interest, Ultra, 

; PG&E, 46 F.4th at 1053-55, and decided that
the enacted Bankruptcy Code did not clearly reject that




                                26
tradition, Ultra, 

; PG&E, 46 F.4th at 1058-
59. They therefore ruled that the Code gives creditors of
solvent debtors the equitable right to contractual or state law
default rate interest “before allocation of surplus value” to
equityholders “absent compelling equitable considerations[.]”
PG&E, 46 F.4th at 1064; see also Ultra, 

.

        The PG&E Court backstopped its decision with the
Bankruptcy Code’s logic of impairment. 46 F.4th at 1060-61.
“[I]mpaired” creditors—those whose bundle of “legal,
equitable, and contractual rights” are “[]altered” by a
bankruptcy plan—are entitled to a host of procedural
protections. Bankruptcy Code § 1124(1). (The classic
impaired creditor receives cents on the dollar for its claims.)
The Ninth Circuit thought limiting unimpaired creditors to
interest at the federal judgment rate ran contrary to the Code’s
system of impairment; doing so would offer PG&E the best of
both worlds by “pay[ing the relevant unimpaired creditors] the
same, reduced interest rate as impaired creditors, while
depriving them of the statutory protections that impaired
creditors enjoy.” PG&E, 46 F.4th at 1061. The Court rejected
this effort to let equity “have its cake and eat it too”; it could
not let PG&E “reap[] a windfall of hundreds of millions of
dollars” at creditors’ expense while denying them both the
statutory protections offered to impaired creditors and their
equitable right to contract rate interest. Id.

       Hertz primarily challenges those decisions by
suggesting they misread Supreme Court precedent. Rather
than require us to continue pre-Code practices absent a clear
statement to the contrary, Hertz says the Supreme Court
relegates historical bankruptcy law to a minor role; it is a mere
“tool of construction” relevant only when the Code is




                               27
genuinely ambiguous. Hartford Underwriters Ins. Co. v.
Union Planters Bank, N.A., 

 (2000). Instead, the
argument continues, the Circuits impermissibly used it as an
“extratextual supplement[,]” 

 to require contract rate
interest without reference to the Bankruptcy Code’s actual text.

        But we do not think those decisions disregard Hartford
or the statutory text. As the PG&E court correctly noted, pre-
Code solvent debtor practice sprung from the pre-Code
absolute priority rule. 46 F.4th at 1054. And, as we explain
below, the Bankruptcy Code adopted the pre-Code version of
that rule. So the common law absolute priority rule is not an
“extratextual supplement” to the Bankruptcy Code. It is an
enacted part of it that we must respect.

        What is that rule? Our quote from Chicago, Rock Island
& Pacific at the beginning of this section sums it up well: in
bankruptcy, equity comes after debt (unless the latter
consents). The absolute priority rule serves as an essential
governor on the bankruptcy process to protect creditors.
“Shareholders retain substantial control” over the debtor
during Chapter 11, which gives them a “significant opportunity
for self-enrichment at the expense of creditors.” In re DBSD
N. Am., Inc., 

 (2d Cir. 2011). One of those
opportunities comes from the debtor’s functionally exclusive
right14 to propose the plan of reorganization that determines

14
   Debtors have the exclusive right to file a plan for the first
120 days of a case, a period that can be extended for up to 18
months. Bankruptcy Code §§ 1121(a) & (d). They often obtain
significant extensions of the exclusivity period. Stephen G.
Moyer, Distressed Debt Analysis: Strategies for Speculative
Investments, 330 (2005) (“[B]ankruptcy courts usually will




                              28
creditors’ ultimate treatment. Id.; see Stephen G. Moyer,
Distressed Debt Analysis: Strategies for Speculative
Investments, 329-31 (2005) (Exclusivity is a “powerful
weapon wielded by management in the battle with
creditors[.]”). A “danger inherent in any reorganization plan
proposed by a debtor” (including this Plan proposed by Hertz)
is that it might “turn out to be too good a deal for the debtor’s
owners.” Bank of Am. Nat’l Tr. and Sav. Ass’n v. 203 N.
LaSalle St. P’ship, 

 (1999) (citing H.R. Rep.
No. 93-137, pt. 1, at 225 (1973)); DBSD, 

(noting that debtor’s proposed plan offered its shareholder
almost thirty times more value than “unsecured creditors . . .
despite the latter’s technical seniority”).

       History proves that to be a substantial risk. Around the
turn of the 20th century, American railroad owners used so-
called “equity receiverships” to restructure otherwise
untenable debts.15     A combination of pro-management
receivers and bank-controlled “protective committees” gave a


have a predisposition toward allowing the debtor time to
present a plan[.]”); Vincent S.J. Buccola, Sponsor Control: A
New Paradigm for Corporate Reorganization, 

, 9 (2023) (Bankruptcy courts often “grant[] managers
serial extensions of the exclusivity period[.]”). Hertz had the
exclusive right to propose a plan through the whole case.
Bankr. D.I. 3905 (extending exclusivity period through July
2021, more than a year after Hertz filed for bankruptcy).
15
  While the 1898 Bankruptcy Act was in force at that time, it
only contemplated corporate liquidation. Amendments in the
1930s added business reorganization procedures. SEC v. U.S.
Realty & Improvement Co., 

 (1940).




                               29
sliver of corporate insiders (including equity) near-complete
control of the reorganization. William O. Douglas, Protective
Committees in Railroad Reorganizations, 

, 567-68 (1934); John D. Ayer, Rethinking Absolute
Priority After Ahlers, 

, 969-71 (1989).
The result of these equity-controlled reorganizations was that
outside creditors were wiped out, while insider equityholders
retained control of a reinvigorated business. Bruce A. Markell,
Owners, Auctions, and Absolute Priority in Bankruptcy
Reorganizations, 

, 74-77 (1991)
[hereinafter Markell, Absolute Priority]; David A. Skeel, Jr.,
Debt’s Dominion: A History of Bankruptcy Law in America,
56-69 (2001).

        The Supreme Court unequivocally rejected those
tactics, most prominently in Northern Pacific Railway Co. v.
Boyd, 

 (1913). It ruled that creditors have
“superior rights against the subordinate interests of . . .
stockholders . . . . [Therefore,] [a]ny device . . . whereby
stockholders [of an insolvent business] were preferred before
the creditor [is] invalid.” 

. Boyd is seen as
announcing the absolute priority rule, which promptly
“thereafter passed into the language and lore of the corporate
lawyer.” Ayer, supra, at 973.16 Applied in bankruptcy, it

16
  But perhaps it was announced earlier. See Chi., Rock Island
& Pac. R.R., 

; Louisville Tr. Co. v. Louisville,
New Albany & Chi Ry. Co., 

 (1899) (“[T]he
familiar rule [is] that the stockholder’s interest in the [bankrupt
company] is subordinate to the rights of creditors. . . . [A]ny
arrangement of the parties by which the subordinate rights [are]
secured at the expense of . . . creditors comes within judicial
denunciation.”).




                                30
prevents business owners, “the most junior claimants[,]” from
recovering anything “unless creditors . . . are paid in full” or
consent. Markell, Absolute Priority, supra at 72.

       Today, the absolute priority rule is housed in § 1129(b).
That section protects impaired creditors from overreaching
plans. Unlike unimpaired creditors, whose rights are left
unaltered and thus are “conclusively presumed” to accept a
proposed plan, § 1126(f), impaired creditors may vote on it. A
plan rejected by a class of impaired creditors can nonetheless
be approved, but only if a court finds that it is “fair and
equitable” to that class, with the burden on the plan proponent.
§ 1129(b); Heartland Fed. Sav. & Loan Assoc. v. Briscoe
Enters., Ltd., II (In re Briscoe Enters., Ltd., II.), 

,
1168-70 (5th Cir. 1993).           That process is known as
“cramdown.” See generally Kenneth N. Klee, All You Ever
Wanted to Know About Cram Down Under the New
Bankruptcy Code, 

 (1979) [hereinafter
Klee, Cram Down].17 In practical terms, that offers plan
proponents a choice: “compensate creditors in full[,]” leaving
them unimpaired, or confirm a plan paying them less (i.e.,
impairing them) in the face of “the Code’s substantive and
procedural protections” for impaired creditors—including the
ballot box and § 1129(b). PG&E, 46 F.4th at 1061.

      With that throat-clearing complete, we turn to our case.
The Plan promised to pay the Noteholders whatever amount
was necessary to “render [them u]nimpaired” (i.e., to leave

17
   In addition, a gateway requirement for a cramdown of an
impaired rejecting class of creditors is that there be an
acceptance of that plan by another class of impaired creditors.
§ 1129(a)(10).




                                31
their rights unaltered). App 1512. Hertz submits that the
“critical question . . . is [what interest rate] an unimpaired class
in a solvent debtor case is entitled to.” Tr. of Oral Arg. at 30.
But that “elides the antecedent question of what constitutes
unimpairment in the first place.” PG&E, 46 F.4th at 1062.18

       A creditor is impaired if its treatment violates the
absolute priority rule because every creditor has a right to
treatment consistent with that principle. This squarely follows
the Supreme Court’s recent decision in Czyzewski v. Jevic
Holding Corp., 

 (2017). There, a debtor sought
to pay friendly junior creditors while giving nothing to hostile
creditors with higher priority. 

. It could not do so
via a plan because this distribution would violate the
Bankruptcy Code’s absolute priority rule. 

. So it
instead obtained an order from the Bankruptcy Court
dismissing the case and distributing the cash to the junior
creditors. 

. Our Court affirmed, reasoning that
“Congress codified the absolute priority rule . . . in the specific
context of plan confirmation . . . [,] and neither Congress nor
the Supreme Court has ever said that the rule applies” to
dismissals. Off. Comm. of Unsecured Creditors v. CIT


18
    Hertz’s position may have been supported by former
§ 1124(3), which declared creditors unimpaired if they
received “cash equal to . . . the allowed amount” of their claim.
But, after a bankruptcy court used that section to deny
post-petition interest to an unimpaired creditor in a solvent
debtor case, Congress promptly repealed it. Solow v. PPI
Enters. (U.S.), Inc. (In re PPI Enters. (U.S.), Inc.), 

, 205-07 (3d Cir. 2003) (discussing legislative overruling
of In re New Valley Corp., 

 (Bankr. D.N.J. 1994)).




                                32
Grp./Bus. Credit, Inc. (In re Jevic Holding Corp), 

 (3d Cir. 2015) (citing § 1129(b)(2)).

        The Supreme Court reversed. Whereas our Court saw
the absolute priority rule as a procedural protection that applied
only when § 1129(b) is invoked (where the Code explicitly
mentions it), the Supreme Court concluded it applied
everywhere absent a clear statement authorizing a departure.
Jevic, 

. It “expect[ed] to see some affirmative
indication of intent if Congress actually meant to [authorize]
backdoor means to achieve the exact kind of nonconsensual
priority-violating final distributions that the Code prohibits[.]”

 “[S]imple statutory silence,” the Court declared, is not
enough to allow a “major departure” from the Code’s basic
principle. 

 In other words, the Bankruptcy Code entitles
every creditor—not just the dissenting impaired creditors who
can invoke § 1129(b)19—to treatment consistent with absolute
priority absent a clear statement to the contrary. Id. That
sounds like a right to us, at least for purposes of the Bankruptcy
Code.20

19
  Contra App. 48 (Bankruptcy Court here announcing that the
absolute priority rule is not relevant in this case because §
1129(b)(2) “on its face is not applicable to unimpaired
creditors”). The Second Circuit concluded in LATAM that “the
absolute priority rule comes into effect only when a class of
impaired creditors votes to reject a plan[.]” 55 F.4th at 388
(citing DBSD, 

). But the opinion never
discusses the Supreme Court’s decision in Jevic.
20
  Impairment is the alteration of a creditor’s rights by a plan,
not alterations to those rights as directed by the Bankruptcy
Code. PPI, 324 F.3d at 204. Contrary to the Noteholders’




                               33
       This conclusion tracks the basic principles of
impairment in bankruptcy. “Congress define[d] impairment in
the broadest possible terms,” L & J Anaheim Assocs. v.
Kawasaki Leasing Int’l, Inc. (In re L & J Anaheim Assocs.),

 (9th Cir. 1993) (quoting In re Madison Hotel
Assocs., 

 (7th Cir. 1984)), to ensure that
creditors affected by a bankruptcy plan can vote on it. Solow
v. PPI Enters. (U.S.), Inc. (In re PPI Enters. (U.S.), Inc.), 

, 203 (3d Cir. 2003). If receiving payment in full a
few months after confirmation renders a creditor impaired
under § 1124(1), W. Real Est. Equities, L.L.C. v. Vill. at Camp
Bowie I, L.P. (In re Vill. at Camp Bowie I, L.P.), 

 (5th Cir. 2013), it must be the case that a creditor faced
with a plan denying it bankruptcy’s fundamental protection (in
the Noteholders’ case, to the tune of hundreds of millions of
dollars) is affected enough to be impaired under that
subsection.21


argument, this means that disallowance by § 502(b)(2) does not
result in impairment. Id.; Ultra Petroleum Corp. v. Ad Hoc
Comm. of Unsecured Creditors of Ultra Res. (In re Ultra
Petroleum Corp.), 

 (5th Cir. 2019);
PG&E., 46 F.4th at 1063 n.11; LATAM, 55 F.4th at 384-85.
Though the Code may limit a creditor’s legal, equitable, and
contractual rights and yet leave it unimpaired, it also grants all
creditors, including those a plan might otherwise deem
unimpaired, the right to treatment consistent with the Code’s
“fundamental” absolute priority rule absent “some affirmative
indication” to the contrary. Jevic, 

.
21
   While not briefed by the parties, we note the effective
consequence of classifying the Noteholders impaired. They
would have been the sole impaired class of creditors under the
Plan, and so would have had the veto power awarded by




                               34
       That result also flows from Jevic’s condemnation of
“backdoor means” to defeat the absolute priority rule. 

. The Bankruptcy Code offers a creditor consent at the
ballot box as a “front door” to confirm a plan that violates
absolute priority. § 1129(a)(8); Markell, Absolute Priority,
supra at 88-89. Concluding that absolute priority is a right that
must be respected in the § 1124(1) analysis directs
noncompliant plans through the front door, as Jevic intended.
Ruling as Hertz requests, by contrast, leaves the back door
wide open in solvent debtor cases like this one and gives plan
proponents the unintended power to force creditors to accept a
“priority-violating” distribution. Jevic, 

; cf.
PG&E, 46 F.4th at 1061 (rejecting “a reading of the Code that
permits . . . end-run[s]” around creditor protections to benefit
equity). Creditors could be compelled to accept—without even
the chance to vote or explicit statutory authorization—
treatment that falls so short of the Code’s basic guarantees that
it could not be “crammed down” on them if they rejected it at
the polls. § 1129(b); Off. Comm. of Unsecured Creditors v.
Dow Corning Corp. (In re Dow Corning Corp.), 

 (6th Cir. 2006). That theory also lacks explicit
statutory support and is therefore contrary to Jevic.

       Accordingly, the Noteholders’ right to treatment
consistent with absolute priority must be honored to leave them
unimpaired. Hertz still maintains that any such right does not
require post-petition interest at the contract rate. In its view,
we cannot rule based on the principle announced in Boyd—that


§ 1129(a)(10). Without their consent, Hertz could not confirm
the Plan. It seems plausible to think the Noteholders would not
have accepted a penny less than their contractual entitlement.




                               35
equity cannot recover until debt is paid in full—because the
Code’s treatment of absolute priority lists “very specific
principles about . . . priorities,” and that list is silent on post-
petition interest. Tr. of Oral Arg. at 47. It argues there is a
“common law absolute priority rule,” id., following Boyd and
its progeny, and a separate absolute priority rule enumerated in
the Code that we are bound to follow. § 1129(b)(2). But we
reject this view because no such dichotomy exists. In fact, the
Bankruptcy Code incorporates the common law absolute
priority rule articulated in Boyd.

        As noted above, a plan satisfies the enacted absolute
priority rule only if it is “fair and equitable.” § 1129(b).
“Congress chose [those] words with care. . . . [They] stand
proxy for over a century of judicial decision-making, and over
half a century of legislative guidance.” Collier on Bankruptcy
¶ 1129.03[4] (16th ed. 2024). That is not just the commentary
of a well-regarded treatise; it is supported by legislative
history. Markell, Absolute Priority, supra, at 88-89 & n.134;
Klee, Cram Down, supra at 142. And, much more importantly,
it tracks the language of the statute.

       When interpreting “fair and equitable” in the
Bankruptcy Act (the Code’s immediate predecessor), the
Supreme Court concluded that those words incorporated the
common law absolute priority rule. Case v. L.A. Lumber
Prods. Co., 

 (1939) (fair and equitable is
a “term of art” that includes Boyd and its progeny); Markell,
Absolute Priority, supra at 85 & nn.102-04. Congress very
deliberately included those exact words in the Bankruptcy
Code. And the Supreme Court is clear: When Congress
imports into a statute a “judicially created concept,” it takes
that concept whole unless it makes its contrary “intent




                                36
specific,” a rule “followed . . . with particular care in
construing” the Bankruptcy Code. Midlantic Nat’l Bank v. N.J.
Dep’t of Envt’l Prot., 

 (1986). We thus see
Congress’s choice to reuse “fair and equitable” as deliberately
incorporating the common law absolute priority rule into the
enacted Bankruptcy Code.

        Further support comes from the precise language of
§ 1129(b)(2), which notes that the fair and equitable test
“includes” certain enumerated requirements. But that does not
reflect an intent to limit absolute priority to just the listed
conditions: “Includes” in the Bankruptcy Code is “not
limiting.” § 102(3). So a plan is not automatically fair and
equitable under the Bankruptcy Code merely because it
complies with the requirements in that section. In re Sandy
Ridge Dev. Corp., 

 (5th Cir. 1989) (citing
In re D & F Constr., Inc., 

 (5th Cir. 1989));
Collier on Bankruptcy ¶ 1129.03[4][b][ii] (16th ed. 2024);
Kenneth N. Klee, Cram Down II, 

, 229-
31 (1990). The use of “includes” suggests that the full meaning
of fair and equitable is located elsewhere; as explained above,
it is found in pre-Code absolute priority caselaw and practice.
22

       That jurisprudence required solvent debtors to pay
contract rate interest before making distributions to equity.
See, e.g., Consol. Rock Prods. Co. v. Du Bois, 

,

22
  The Second Circuit disagreed in LATAM, 55 F.4th at 388-89
(concluding that the absolute priority rule’s requirements are
fully codified in § 1129(b)(2)). But LATAM does not address
the specific language of the Code, which controls our analysis
here.




                              37
527-28 (1941) (citing absolute priority cases, including
Boyd);23 see generally PG&E, 46 F.4th at 1054 (pre-Code
solvent debtor jurisprudence flowed from “[t]he common-law
absolute priority rule”); Chaim J. Fortgang & Lawrence P.
King, The 1978 Bankruptcy Code: Some Wrong Policy
Decisions, 

, 1159 (1981) (the
Bankruptcy Act’s absolute priority rule required “post-petition
interest . . . at the full, contractually agreed-upon rate” before
equityholders could recover). Reviewing “three centuries of
bankruptcy law,” the Ultra Court saw a simple rule: “When a
debtor can pay its creditors interest on its unpaid obligations in
keeping with the valid terms of their contract, it must.” 

.

       That makes sense. To repeat, the absolute priority rule
requires creditors’ obligations be paid in full before owners,
with junior rights to the business, take anything at all. So it
should be no surprise that several thoughtful decisions
conclude that the Bankruptcy Code’s absolute priority rule,
which incorporates common law and Bankruptcy Act
jurisprudence, can require payment of contract rate interest in
solvent debtor cases. Dow Corning, 

; In re
Energy Future Holdings Corp. (EFH I), 

(Bankr. D. Del. 2015); In re Mullins, 

, 10-16 (Bankr.

23
   The Bankruptcy Court’s opinion suggests Consolidated
Rock is inapplicable here because the creditors in that case had
collateral for their claims, unlike the Noteholders. App. 46-47.
But the logic of Consolidated Rock does not focus on the
security held by the lenders; rather, it emphasizes the amounts
the junior stockholders will recover. 

 (noting
that the “plan does not satisfy the fixed principle of the Boyd
case”).




                               38
D. Mass. 2021); cf. PG&E, 46 F.4th at 1060-61. We join their
reasoning.

        But while the absolute priority rule can require payment
of contract interest in solvent debtor cases, it does not always
do so. Rather, it imposes the equitable rate of post-petition
interest, whatever that may be. See, e.g., Dow Corning, 

; EFH I, 540 B.R at 117-18. This equitable
concern is not for former owners. Rather, courts primarily
worry that paying one creditor contract rate interest might give
it an inequitable leg up over its peers if there is not enough to
pay everyone their full rate. See, e.g., PG&E, 46 F.4th at 1064.
The ordinary course, with which we generally agree, thus
would be to remand to the Bankruptcy Court and ask it to
determine whether any “compelling equitable considerations”
counsel against awarding the Noteholders their contract rate.
Id. (citations omitted).

        For two reasons, however, we do not do so here. The
first is procedural: Hertz never suggested we remand to the
Bankruptcy Court rather than award the Noteholders their
requested interest. Our forfeiture doctrine counsels against
rewarding that choice. Barna v. Bd. of Sch. Dirs. of Panther
Valley Sch. Dist., 

 (3d Cir. 2017).

       The second is equitable. In the normal case, the
equitable rate of post-petition interest will be determined
before plan confirmation—i.e., before the money goes out the
door. But here, the Stockholders received $1.1 billion in value
from Hertz when the Plan went effective more than three years
ago. No party suggests we unscramble that egg. So our
equitable calculus must reflect that the Stockholders already
took their dividend. Therefore, the equities demand the




                               39
Noteholders recover post-petition interest at the contract rate.
It would be profoundly unfair to scrimp on the Noteholders’
interest when the junior Stockholders already received a billion
dollar distribution. To be clear, the post-petition interest we
award includes the Applicable Premiums, which Hertz
persuaded us were contractual interest accruing after the
bankruptcy filing. Supra II.B; Ultra, 

 (“[T]he
traditional solvent-debtor exception compels payment of the
Make-Whole Amount[.]”); cf. Dow Corning, 

(“[T]here is a presumption that default interest should be paid
to unsecured claim holders in a solvent debtor case.”).

        Our result is supported by the requirement that we
interpret the Bankruptcy Code “holistic[ally.]” United Sav.
Ass’n of Tex. v Timbers of Inwood Forest Assoc’s, 

 (1988). We do so with an eye to “produc[ing] a
substantive effect that is compatible with the” Code. 

Hertz’s theory that the Noteholders should not recover contract
rate interest creates significant tensions with the Code’s basic
structure. We briefly note two of them. First, when a plan
sticks only one class of creditors with losses, it cannot be
confirmed over their objection. § 1129(a)(10). That “critical
confirmation requirement[]” prevents “abuse of creditors” by
ensuring that plan proponents cannot force one unlucky class
to bear the entire brunt of the bankruptcy against its will. John
Hancock Mut. Life Ins. Co v. Route 37 Bus. Park Assocs., 

 (3d Cir. 1993). Hertz’s proposed result would
do just that by forcing the Noteholders alone to sacrifice over
their vigorous dissent. Concluding they are impaired by
payment of interest at the federal judgment rate makes (a)(10)
effective in this case by protecting them from a plan that, at
their expense alone, pays everyone else. Second, impaired
rejecting creditors of solvent debtors may receive contract rate




                               40
interest through the absolute priority rule. Dow Corning, 

.24 But, under Hertz’s rule, unimpaired
creditors like the Noteholders would receive only the federal
judgment rate. In effect, they would recover significantly less
than is fair and equitable (and so less than objecting impaired
creditors     must     receive).     And      “creditors   who
are unimpaired . . . cannot    be      treated    any    worse
than impaired creditors, who at least get to vote[.]” Ultra, 

 (emphases in original); PG&E, 46 F.4th at 1060-
61; EFH I, 

.

        Our colleague dissenting in part believes that we offer
short shrift to § 502(b)(2), which “plainly disallows” post-
petition interest in any form. Partial Dissent 1. Not so. Even
Hertz agrees that “[u]nsecured creditors may indeed receive
post-petition interest on their allowed claims” in a solvent
debtor case like this one. Hertz Br. 30 (emphasis in original).
That concession “forecloses the notion that § 502(b)(2) alone
limits unimpaired creditors’ ability to collect post[-]petition
interest,” PG&E, 46 F.4th at 1059. This must be the case
because “reading . . . § 502(b)(2) to disallow all post-petition
interest, whether as part of a claim or on a claim, would plainly
conflict with § 1129(a)(7)(A)(ii) and § 726(a)(5), which
expressly operate to allow post-petition interest on claims.”
Ultra, 

 n.27 (emphases in original); see also
EFH I, 

 (“[T]here is a distinction between the

24
   Contra App. 53 (Bankruptcy Court stating that “[i]f the
Noteholders had been treated as impaired and [rejected] the
Plan, they would have received . . . post-petition interest in
accordance with sections 1129(a)(7) and 726(a)(5)[,]” which
the Bankruptcy Court concluded awarded interest only at the
federal judgment rate).




                               41
payment of interest on an allowed claim as opposed to as an
allowed claim. . . . The claim itself does not change. What
may change is what the holder of a claim is entitled to receive
under a confirmed plan.”) (emphases in original); In re Dow
Corning Corp., 

 (Bankr. E.D. Mich. 1999)
(“[S]ince § 502(b)(2) speaks only to claim allowance . . ., [it]
does not rule out the possibility of interest on allowed claims
pursuant to § 1129(b).”) (emphases in original); Mullins, 633
B.R. at 15.

       And this difference explains why PPI, which held that
creditors are not impaired under § 1124(1) when a bankruptcy
plan gives them everything they could receive under the Code,
is consistent with our decision.25 324 F.3d at 204. The
Noteholders would be impaired by receiving interest at the

25
   Hertz reads PPI’s specific holding on § 502(b)(6) to apply
equally to § 502(b)(2). It does not. In a side argument, the PPI
landlord attempted to rely on Congress’s repeal of § 1124(3)’s
post-petition interest provision to support his claim. See 324
F.3d at 205–07; see also n.18, supra. Our Court noted that
“§ 1124(1) and § 1124(3) were different exceptions to the
presumption of impairment, and the repeal of one should not
affect the other. . . . [U]nlike some other Code sections,” we
explained, “the limitation on damages under § 502(b)(6) is
‘absolute.’” Id. at 204 (quoting 4 Collier on Bankruptcy
§ 502.03 (15th ed. 2002)). Section 502(b)(2) is one of those
“other Code sections.” Thus Hertz cannot rely on PPI—a
decision affirming the capping of lease-termination damages
against a solvent debtor under § 502(b)(6)—to argue that our
narrow holding there automatically cuts off a solvent debtor’s
obligation to pay post-petition interest at the applicable pre-
petition rate under § 502(b)(2).




                              42
federal judgment rate because the Bankruptcy Code,
§ 502(b)(2) included, permits (and, in this case, requires) the
Plan to pay them contract rate interest on their claims via the
absolute priority rule. As PPI says, the barometer for
impairment is “whether the plan itself is a source of limitation
on a creditor’s legal, equitable, or contractual rights.” 324 F.3d
at 204 (emphasis added).

                        III. Conclusion

        The Noteholders loaned Hertz billions and received
back a contractually valid promise to pay fees and interest. The
COVID pandemic resulted in a liquidity crisis and a Chapter
11 filing. Bankruptcy gave the then-insolvent Hertz, among
other things, the opportunity to disallow claims for interest not
yet mature at its filing. But the pandemic’s vise eased and the
bounceback to Hertz’s business made it so financially strong at
confirmation of its Plan a year later that Hertz concedes it must
pay post-petition interest on the Noteholders’ allowed claims.
But at what rate? Two holdings in similar circuit court cases
say it is the rate imposed by the relevant nonbankruptcy law.
We agree and expand further on our primary reasoning for that
result.

       With more than a quarter billion dollars at stake, it is no
shock that Hertz looked to maximize its leverage over the
Noteholders rather than simply giving in. Its argument was
creative and reflects a deep familiarity with the details of the
Bankruptcy Code. But it misses the bigger picture. The Code
does not award leverage arbitrarily. Rather, it assigns it in
ways that ensure the “plan will achieve a result consistent with
the objectives and purposes of the . . . Code.” Madison Hotel,

 (internal quotation marks omitted).




                               43
          And there is no question that Hertz’s proposal—paying
the Noteholders a fraction of the interest they were
contractually promised, while distributing more than a billion
dollars to the Shareholders—is contrary to those objectives and
purposes. Once again, “the familiar rule [is] that the
stockholder’s interest in the [bankrupt company] is subordinate
to the rights of creditors. . . . [A]ny arrangement of the parties
by which the subordinate rights . . . [are] secured at the expense
of . . . creditors comes within judicial denunciation.” Louisville
Tr. Co. v. Louisville, New Albany & Chi. Ry. Co., 

 (1899). The accretional array of cases, topped by Jevic,
carries this “fixed principle,” Boyd, 

, through
to today. Marbled in the Bankruptcy Code, it disfavors
nonconsensual distributions to equity over creditors.

       So it should be no surprise in this solvent debtor case
that Hertz’s strategic maneuvering comes to naught. The
Code’s careful design does not give Hertz enough leverage to
subvert that law’s foundational goals. We thus affirm in part
and reverse in part the Bankruptcy Court’s decisions. To
comply with the absolute priority rule, and thus fulfill the
Plan’s promise to “leave[] unaltered the [Noteholders’] legal,
equitable, and contractual rights[,]” § 1124(1), Hertz must pay
the post-petition interest at the Notes’ applicable contract rate,
including the Applicable Premiums on the 2026 and 2028
Notes.




                               44
PORTER, Circuit Judge, concurring in part and dissenting in
part.
       I join the majority’s opinion except for Part II.C, which
holds that Hertz must pay the Applicable Premiums and post-
petition contract-rate interest to the Noteholders. The Fifth and
Ninth Circuits have reached the same result as the majority.
See Ultra Petroleum Corp. v. Ad Hoc Comm. of Opco Unse-
cured Creditors (In re Ultra Petroleum Corp.), 

(5th Cir. 2022); Ad Hoc Comm. of Holders of Trade Claims v.
Pac. Gas & Elec. Co. (In re PG&E Corp.), 

 (9th
Cir. 2022). But I largely agree with the dissents in those cases,
which recognize that the Bankruptcy Code plainly disallows
claims “for unmatured interest” like the Noteholders’ claims
for the Applicable Premiums and post-petition interest. 

(b)(2); see Ultra, 51 F.4th at 160–64 (Oldham, J.,
dissenting); PG&E, 46 F.4th at 1065–75 (Ikuta, J., dissenting).
To the extent that the majority’s reasoning tracks that of the
Fifth and Ninth Circuits, I have little to add to those thoughtful
dissents. But to the extent that it differs, I write separately.
                                I
       The majority’s core argument concerns 

, which governs when “a class of claims or interests is
impaired under a plan.” A class of claims is unimpaired if,
“with respect to each claim or interest of such class, the plan
leaves unaltered the legal, equitable, and contractual rights to
which such claim or interest entitles the holder of such claim
or interest.” 

 § 1124(1). Hertz’s Plan promised to pay the
Noteholders’ claims “in the amount necessary to render them
unimpaired.” J.A. 12.
      To honor that promise, the majority concludes that
Hertz must pay contract-rate interest. That is because,
according to the majority, one of the “rights” protected under
§ 1124(1) is treatment consistent with bankruptcy law’s “abso-
lute priority rule.” Roughly speaking, the absolute priority rule
requires creditors to be paid in full before equityholders receive
a penny. Czyzewski v. Jevic Holding Corp., 

, 464–
65 (2017) (explaining the rule and describing it as “fundamen-
tal to the Bankruptcy Code’s operation”). Because Hertz has
paid over $1 billion to its former equityholders, the majority
believes that Hertz must pay its creditors’ claims in full to ren-
der them unimpaired, including the Applicable Premiums and
post-petition interest to which the Noteholders are contractu-
ally entitled.
        I disagree with the majority for two reasons. First, treat-
ment consistent with the absolute priority rule is not one of the
“rights” protected under § 1124(1). Impairment does not de-
pend on whether the Plan alters any of the Noteholders’ “legal,
equitable, and contractual rights,” regardless of the legal
source from which the right springs. Id. It depends on whether
the Plan alters the “rights to which” the Noteholders’ claims
“entitle[]” the Noteholders. Id. Here, the rights to which the
Noteholders’ claims entitle them do not include the right to
treatment consistent with absolute priority. See PG&E, 46
F.4th at 1073 (Ikuta, J., dissenting) (“[T]he language of
§ 1124(1) . . . explains only when a claim is impaired” and
“does not [otherwise] describe when a holder’s equitable rights
have been impaired[.]”). The Code defines a “claim” as any
“right to payment” and any “right to an equitable remedy for
breach of performance if such breach gives rise to a right to
payment.” 

(5). These are the “rights to which”
a claim “entitles [its] holder,” 

 § 1124(1), and they may in-
clude “equitable rights such as restitution” and “quantum me-
ruit,” see PG&E, 46 F.4th at 1074 (Ikuta, J., dissenting). But
the Noteholders’ right to treatment consistent with absolute




                                2
priority is a “procedural protection,” Maj. Op. 33, not a sub-
stantive “right to payment” or “right to an equitable remedy for
breach of performance,” § 101(5). Assuming that the absolute-
priority right exists, it flows from a legal source other than the
Noteholders’ claims—like pre-Code practice, the Code itself,
or background principles of bankruptcy law—and therefore is
irrelevant to impairment under § 1124(1). See Maj. Op. 33
(stating that “the Bankruptcy Code,” not claims themselves,
“entitles every creditor . . . to treatment consistent with abso-
lute priority”).1

1
  Interestingly, Hertz believes that it must pay post-petition in-
terest on the Noteholders’ claims at the federal judgment rate
to render them unimpaired. This view rests in part on the prem-
ise that § 502(b)(2) disallows post-petition interest as part of a
claim but does not affect post-petition interest accruing on an
allowed claim. See, e.g., Ultra, 

 n.27. However,
I see “no [textual] basis for the . . . interpretation of § 502(b)(2)
as prohibiting interest as part of an allowed claim but not pro-
hibiting interest on a claim once it is allowed.” PG&E, 46 F.4th
at 1067 (Ikuta, J., dissenting). While some other provisions in
the Code provide for post-petition interest on allowed claims,

(a)(5), I tend to view such provisions as “ex-
ceptions to [a] general rule disallowing post-petition interest,”
PG&E, 46 F.4th at 1067 (Ikuta, J., dissenting), not as evidence
that § 502(b)(2) does not generally apply to post-petition inter-
est on allowed claims. In any event, we need not decide
whether Hertz could have paid no post-petition interest what-
soever without impairing the Noteholders’ claims. Hertz paid
post-petition interest at the federal judgment rate to the Note-
holders and does not ask the Noteholders to return that amount.
Following the principle of party presentation, I would “rely on
the parties to frame the issues for decision” and hold only that




                                 3
         Second, even if § 1124(1) implies the Noteholders’
right to treatment consistent with absolute priority, the Note-
holders’ claims are nevertheless unimpaired because it is the
Code that alters the Noteholders’ right, not the Plan. See Solow
v. PPI Enters. (U.S.), Inc. (In re PPI Enters. (U.S.), Inc.), 

, 204 (3d Cir. 2003) (“[A] creditor’s claim outside of
bankruptcy is not the relevant barometer for impairment; we
must examine whether the plan itself is a source of limitation
on . . . rights.”). It is the Code, not the Plan, that disallows the
Noteholders’ claims for the Applicable Premiums and post-pe-
tition contract-rate interest, § 502(b)(2), resulting in treatment
that the majority deems inconsistent with absolute priority.
                                 II
        In making the argument discussed in the previous sec-
tion, the majority relies on Jevic to support the proposition that
treatment consistent with absolute priority is “a right . . . for
purposes of the Bankruptcy Code.” Maj. Op. 33. But the ma-
jority separately appears to rely on Jevic for an argument that
does not depend on impairment under § 1124(1). My col-
leagues describe the Jevic Court as “conclud[ing]” that abso-
lute priority “applie[s] everywhere absent a clear statement au-
thorizing a departure.” Maj. Op. 33. Under this view, Hertz
might be required to pay contract-rate interest because the
Code does not clearly state that absolute priority should be vi-
olated here, regardless of whether the Noteholders’ claims are
impaired under § 1124(1).
        Jevic dealt with a bankruptcy court’s power to dismiss
a case under 

(b). Ordinarily, a dismissal re-
sults in a restoration of the pre-petition status quo, “revest[ing]

Hertz need not pay more than it has already paid. Greenlaw v.
United States, 

 (2008).




                                 4
the property of the estate in the entity in which such property
was vested immediately before the commencement of the
case.” 

 § 349(b)(3). But the Code permits a bankruptcy
court, “for cause,” to “order[] otherwise,” id. § 349(b), in a so-
called “structured dismissal.” The bankruptcy court in Jevic or-
dered a structured dismissal “that gave money to high-priority
secured creditors and to low-priority general unsecured credi-
tors but which skipped certain dissenting mid-priority credi-
tors.” 

. This dismissal violated the absolute pri-
ority rule as codified for Chapter 7 liquidations and Chapter 11
plans because it compensated low-priority creditors before
mid-priority creditors received anything on their $8.3 million
claim. 

; see 

, 726, 1129.
        The Supreme Court held that the bankruptcy court
lacked the power to order such a dismissal. Jevic, 

. As the majority emphasizes, the Court noted “[t]he im-
portance of the priority system,” which requires “more than
simple statutory silence if, and when, Congress were to intend
a major departure.” 

. But the Court did not rest its
decision on that reasoning alone, proceeding to observe that
there is scant basis for “priority-violating” structured dismis-
sals in the Code. 

 The Code’s baseline is for dismissals to
return the parties to the pre-petition status quo, which does not
violate absolute priority. 

. Deviations from this base-
line are permitted only “for cause.” § 349(b). The Court con-
sidered “cause” to be “to weak a reed upon which to rest [a]
weighty . . . power” like a priority-violating dismissal. Jevic,

. It reached this conclusion because of the
meaning of “cause” in context, which “appears designed to
give courts the flexibility to make the appropriate orders to pro-
tect rights acquired in reliance on the bankruptcy case,” not to
“make general end-of-case distributions of estate assets” that




                                5
violate priority. 

 (internal quotation marks and quoted
source omitted).
        I disagree that Jevic requires Hertz to pay contract-rate
interest for at least two reasons. First, the posture of this case
is distinguishable from that of Jevic. There, the bankruptcy
court exercised a power without any express basis in the Code,
thereby violating absolute priority, so the Supreme Court con-
cluded that the bankruptcy court was not so empowered. Jevic,
580 U.S. at 464–67. Here, the Code expressly disempowers
courts from allowing claims for post-petition contract-rate in-
terest over an objection. § 502(b)(2). The majority concludes
that because this disempowerment violates absolute priority,
we may disregard it and wield power that the Code expressly
withholds from us. I find no support for that conclusion in
Jevic, where the bankruptcy court was not expressly empow-
ered to violate absolute priority.
        Second, even if the majority is correct that Hertz vio-
lates the common law absolute priority rule, Hertz’s violation
differs significantly from the violation in Jevic. There, the
structured dismissal violated the codified absolute priority
rules for Chapter 7 liquidations and Chapter 11 plans, insofar
as low-priority creditors were paid something but some mid-
priority creditors were paid nothing. Jevic, 

.
Here, Hertz has not violated the codified absolute priority rules
because it has paid the Noteholders’ allowed claims in full. For
both Chapter 7 liquidations and Chapter 11 plans, codified ab-
solute priority requires payment of allowed claims, not pay-
ment of disallowed contractual entitlements. See, e.g.,
§ 726(a)(3) (giving third priority to “payment of any allowed
unsecured claim proof of which is tardily filed” (emphasis
added)); § 1129(b)(2)(B)(i) (requiring, for a plan to be “fair
and equitable,” that each unsecured creditor “receive or retain




                                6
on account of such claim property of a value . . . equal to the
allowed amount of such claim” (emphasis added)). Hertz’s
Plan therefore fits comfortably with the codified absolute pri-
ority rules that were violated in Jevic and on which that opinion
was based.
       For those two reasons, even assuming that Jevic an-
nounces a clear-statement rule, it does not apply to the facts
here. Instead of a clear-statement rule, I would apply the Su-
preme Court’s typical approach to harmonizing pre-Code prac-
tice with the Code’s text, under which pre-Code practice “can
be relevant to the interpretation of an ambiguous text” but is
irrelevant if there is “no textual ambiguity.” RadLAX Gateway
Hotel, LLC v. Amalgamated Bank, 

 (2012).
Because the Code’s disallowance of the Noteholders’ claims is
clear and unambiguous,2 I would not use the common law ab-
solute priority rule as an “extratextual supplement” to supplant
§ 502(b)(2). Hartford Underwriters Ins. Co. v. Union Planters
Bank, N.A., 

 (2000).
                                III
       In addition to their arguments regarding impairment and
Jevic, my colleagues appeal more generally to policy. They ar-
gue that treating the Noteholders as unimpaired and allowing
Hertz to pay them less than contract-rate interest would pro-
duce odd results. For example, they argue that the unimpaired
Noteholders would be treated worse than impaired, dissenting
creditors, insofar as the latter would be entitled to “fair and eq-
uitable” treatment that would include contract-rate interest. My

2
  Assuming that Jevic’s clear-statement rule applies here, it is
satisfied because § 502(b)(2) disallows post-petition interest
with “unmistakabl[e]” clarity. Cohen v. de la Cruz, 

 (1998).




                                7
colleagues may well be correct that “unimpaired creditors
[will] be treated worse than impaired creditors” under Hertz’s
interpretation, but we are bound to “enforce[] the Code’s ex-
press terms” regardless of such policy considerations. PG&E,
46 F.4th at 1075 (Ikuta, J., dissenting).
                        *       *      *
        For these reasons, I respectfully concur in part and dis-
sent in part.




                                8