In a meticulous, 32-page opinion that reads more like a finance treatise than a stay-relief ruling, Chief Judge G. Michael Halfenger (Bankr. E.D. Wis.) delivered perhaps the most thorough judicial analysis to date of whether Till v. SCS Credit Corp., 541 U.S. 465 (2004), requires bankruptcy courts to use the national prime rate as the starting point for a chapter 11 cramdown interest rate.

Judge Halfenger’s answer: No—at least not when market participants in the relevant lending sector price loans off Treasury note rates and SOFR rather than prime. The opinion also provides significant guidance on the absolute priority rule, credit bidding limits, break-up fees, and the evidentiary burden for risk adjustments under Till’s formula approach.

The Wisconsin & Milwaukee Hotel: A COVID Casualty Fighting to Survive: Wisconsin & Milwaukee Hotel LLC owns and operates an upscale Marriott hotel in Milwaukee. It is the debtor’s sole significant asset. On track to refinance in March 2020, the debtor was derailed by the COVID-19 pandemic and ultimately filed for Chapter 11 in 2024 after failing to meet a required repayment.

The debtor’s secured lenders (Computershare Trust Company, N.A., and Wisconsin & Milwaukee Hotel Funding LLC) grew frustrated with repeated plan amendments and moved for relief from stay, arguing the plan violated the absolute priority rule, failed feasibility, and proposed an unreasonably low cramdown rate. This post focuses on the cramdown interest rate dispute.

Judge Halfenger was sympathetic but declined to lift the stay: “While the end may be near,” he wrote in early January 2026, it is not quite the final curtain.” Since that ruling, the pre-confirmation hearing docket has been very active.

Cramdown Interest Rates and the Treasury Note Alternative: At the heart of the opinion is Judge Halfenger’s analysis of the proper base rate for Till’s formula approach under § 1129(b)(2)(A)(i)(II). With no competitive market for this financing, the court applied Till’s formula: (1) select a base/reference rate; (2) adjust upward for risk.

The debtor proposed the five-year Treasury note rate (3.8% as of August 2025) plus a 2.7-point risk premium (total 6.5%). Lenders argued for the prime rate (7.5%) plus 3.8 points (at least 11.39%).

The Till Plurality and Marks Analysis. Judge Halfenger thoroughly analyzed Till’s fractured Supreme Court opinion in which the plurality endorsed a formula starting with the national prime rate, Justice Thomas favored a risk-free rate, and the dissenters preferred the contract rate. Judge Halfenger noted that under Marks v. United States, 430 U.S. 188, 193 (1977), “[w]hen a fragmented Court decides a case and no single rationale explaining the result enjoys the assent of five Justices, ‘the holding of the Court may be viewed as that position taken by those Members who concurred in the judgments on the narrowest grounds. . . .’ “).

Under Marks, Judge Halfenger noted, the controlling holding is the narrowest grounds shared by those concurring in the judgment, and so Till does not require that the prime rate serve as the base in all contexts. Indeed, the plurality itself noted that chapter 13 and chapter 11 differ materially, and its directive to “follow essentially the same approach” in chapter 11 left room for adaptation.

The Eighth Circuit’s Topp Decision: Judge Halfenger cited to Farm Credit Services of America v. Topp (In re Topp), 75 F.4th 959 (8th Cir. 2023), which he said is “the only appellate opinion to squarely address whether Till requires starting from the prime rate.” In Topp, the Eighth Circuit was emphatic:

We see no legal significance to whether a court starts with a risk-free rate and adds full risk or starts with a some-risk rate and adds some more. If the court properly follows the formula approach, the ultimate discount rate, not the starting point, is what matters.

Simply put, Topp says, “Till did not make the treasury rate obsolete as a matter of law.”

The Market Evidence: Three witnesses— two for the debtor and one for the lender—testified that hotel financing market participants do not use the prime rate as a reference. The debtor’s expert, Deborah Friedland, testified that hospitality lenders use Treasury note rates and SOFR, with luxury hotel loans typically priced 250–425 basis points above the five-year Treasury note. The lender’s analyst, Cynthia Nelson, conceded that prime is not customary for long-term or secured real estate loans and that she had “no factual reason” for preferring prime over Treasury, other than Till’s suggestion. She called the base rate “ultimately a red herring.”

The Court’s Ruling: Judge Halfenger concluded:

The evidence thus persuasively supports use of the five-year Treasury note rate as the reference rate…. The Treasury note rate, like the prime rate, is an easily determined published rate, but it has the advantage in the current context of reflecting the market’s prediction of the inflation risk over the next five years— at the end of which the plan provides for an adjustment to the cramdown rate based on the then-current five-year Treasury note rate—and does not reflect lender compensation components that the Till plurality reasoned are inapplicable in the cramdown context.

Judge Halfenger then addressed risk adjustment, the burden as to which is on the secured creditor to justify. Based on Friedland’s testimony, the Court held, a 120-basis-point upward adjustment was warranted for the default risk faced even by the best hotel borrowers. The Court then agreed that an additional 200-basis-point adjustment was justified because of the debtor’s chapter 11 status, the plan’s 18-year duration, and the 100% loan-to-value ratio. The Court, however, rejected further upward adjustments, finding the lender’s arguments—such as equating creditor risk with equity owner risk—unpersuasive and inconsistent.

Practice Note: Where market evidence shows that Treasury note rates or SOFR are standard reference rates (such as in the commercial real estate and hospitality industries), bankruptcy courts may adopt the Treasury note rate as the base for Till’s formula approach. The Eighth Circuit’s Topp decision provides appellate support, and Chief Judge Halfenger’s detailed opinion offers a practical roadmap for developing the necessary evidentiary record.

In re Wisconsin & Milwaukee Hotel LLC, Case No. 24-21743-gmh (Bankr. E.D. Wis. Jan. 5, 2026) 2026 WL 31366