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Effect Of Insolvency Proceedings On Creditor's Right To Interest, Fred T. Hanson

Michigan Law Review

Where the claims of all creditors are of the same class and. assets are insufficient to pay in full the amount due on all claims when insolvency proceedings are begun, the general rule is that interest thereafter accruing will not be included in computing dividends on claims. The reasons usually given for this rule are: (a) The delay in payment is not the act of the debtor but is an act of the law for the mutual benefit of all the creditors. (b) In the case of claims bearing different rates of interest, it would be inequitable to permit the …