The ability of a secured creditor to credit bid its debt in connection with a sale of a debtor’s assets received a strong boost in a decision last month in the Chapter 11 case of Aeropostale from U.S. Bankruptcy Judge Sean Lane of the Southern District of New York. Two recent decisions, Fisker Automotive and Free … Continue Reading
A recent ruling in the Chapter 11 case of Free Lance-Star Publishing limited the credit bidding rights of a secured creditor. The ruling has called into question the ability of the holder of secured debt to utilize such debt to acquire companies on a going concern basis in bankruptcy cases, particularly in instances where the … Continue Reading
A few months ago, a ruling in the Chapter 11 case of Fisker Automotive narrowed a secured creditor’s right to credit bid its debt in connection with a sale of the debtor’s assets. The decision surprised many observers and resurrected uncertainty about a debtor’s ability to limit a secured lender’s credit bidding rights (a dispute … Continue Reading
Fisker Automotive’s chapter 11 case began in what has become a depressingly familiar fashion – a fast-tracked sale to a secured lender. However, two rulings by Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware have made this a fascinating case to follow. Judge Gross has directed Fisker to proceed with … Continue Reading
The U.S. Supreme Court today in Radlax Gateway Hotel, LLC, et al. v. Amalgamated Bank unanimously upheld the right of secured creditors to credit bid their debt upon a sale of their collateral pursuant to a nonconsensual chapter 11 plan of reorganization. As described in numerous prior posts on this site, the ruling resolves … Continue Reading
The Supreme Court heard arguments yesterday in RadLAX Gateway Hotel over whether the Bankruptcy Code permits a debtor in a chapter 11 case to sell encumbered assets without providing its secured lenders an opportunity to credit bid their debt. As previously described on this site, a circuit split arose last year, when the Seventh … Continue Reading
The U.S. Supreme Court will rule this term in RadLAX Gateway Hotel Inc. v. Amalgamated Bank on whether the Bankruptcy Code permits a debtor in a chapter 11 case to sell encumbered assets without providing the secured lender an opportunity to credit bid its debt. Determination of this question will require the Court essentially to choose … Continue Reading
Critics of last year’s decision on credit bidding by the Third Circuit Court of Appeals in the Philadelphia Newspapers chapter 11 case welcomed the Seventh Circuit’s recent unanimous opinion in River Road Hotel Partners LLC. The Seventh Circuit expressly adopted the Judge Tom Ambro’s cogent analysis in his Philadelphia Newspapers dissent. In River Road, the debtors … Continue Reading
The U.S. Court of Appeals for the Seventh Circuit has taken under advisement the latest case involving the now contentious issue of credit bidding. Judge Bruce Black of the United States Bankruptcy Court for the Northern District of Illinois last year refused to permit the debtors in In re River Road Hotel Partners LLC, et … Continue Reading
Bankruptcy lawyers who are regularly involved in distressed m&a deals have been wondering for the past few months about the potential fallout from Philadelphia Newspapers. In that case, as previously described on this site, the Third Circuit Court of Appeals upheld the debtor’s efforts to deny its secured lenders the right to credit bid in connection … Continue Reading
In the end, all of the maneuvering in the Philadelphia Newspapers chapter 11 case appears to have done nothing but leave behind some very bad case law and a great deal of future uncertainty. As previously described on this site, the Third Circuit Court of Appeals upheld the debtor’s efforts to deny the secured lenders the right to credit … Continue Reading
Some cases really should not be all that difficult. However, when judges choose to divorce statutory text completely from any reference to underlying legislative intent and long standing commercial practice, inexplicable results follow. A few months ago, I wrote of a decision by the U.S. District Court for the Eastern District of Pennsylvania that denied secured … Continue Reading
A recent decision regarding a secured lender’s right to credit bid its debt in the Philadelphia Newspapers chapter 11 case has raised significant concern among financial institutions and investment funds. The U.S. Court of Appeals for the Third Circuit has agreed to hear arguments on an expedited basis in the lenders’ appeal from the decision … Continue Reading
