Another bankruptcy court — this time in New York — has weighed in on the issue of whether “make whole” provisions are enforceable in bankruptcy. See In re MPM Silicones, LLC, et al. (a/k/a Momentive Performance Materials).

What is a “make whole” provision? It is a provision in a loan agreement or indenture that requires a borrower to pay the lender a premium for any payment made by the borrower prior to its due date. The premium is intended to compensate the lender for the interest that it would have otherwise earned on the outstanding obligation had it not been prepaid.