A Secured Creditor's Absolute Legal Right to Credit Bid under 11 U.S.C. § 1129(b)(2)(A)

In this Emerging Issues Analysis, James M. Lawniczak addresses decisions from the Third and Fifth Circuits holding that secured creditors do not have an absolute legal right to credit bid when their collateral is sold through a plan of reorganization. While there may be a small swing in negotiation...

In re Philadelphia Newspapers, LLC, 2010 U.S. App. LEXIS 5805 (3d Cir. Mar. 22, 2010)

Authors from Cravath, Swaine & Moore consider the Third Circuit's decision in In re Philadelphia Newspapers. This decision, along with the decision in In re Pacific Lumber, marks a significant departure from long-held expectations of secured creditors and could endanger protections traditionally...

LexisNexis® Bankruptcy Law Community Podcast featuring James Lawniczak of Calfee, Halter & Griswold on a secured creditor's absolute legal right to credit bid

On this edition, James Lawniczak of Calfee, Halter & Griswold in Cleveland discusses the differences and similarities of two Circuit Court decisions that held secured creditors do not have an absolute legal right to credit bid when their collateral is sold through a plan of reorganization. Copyright©...

Bank of New York Trust Co., NA v. Official Unsecured Creditors' Committee (In re Pacific Lumber Co.), 2009 U.S. App. LEXIS 21749 (Sept. 29, 2009)

LexisNexis Overview: Because Chapter 11 debtors were proceeding to sell assets free and clear under 11 U.S.C.S. § 1129(b)(2)(A)(iii), secured lenders had no right to credit bid at the auction sale of the collateral; thus, the district court's reversal of the bankruptcy court's holding...

In re Philadelphia Newspapers, LLC, 2010 U.S. App. LEXIS 5805 (3d Cir. Mar. 22, 2010)

LexisNexis Overview: Because Chapter 11 debtors were proceeding to sell assets free and clear under 11 U.S.C.S. § 1129(b)(2)(A)(iii), secured lenders had no right to credit bid at the auction sale of the collateral; thus, the district court's reversal of the bankruptcy court's holding...

New Opinion Raises Difficult Questions on Adequate Creditor Protection

A new opinion in the Scopac case raises difficult questions about adequate protection. In Matter of Scopac , No. 09-40307 (5 th Cir. 10/19/10), which can be found here, the Fifth Circuit ruled that secured creditors were entitled to a super priority claim for failure of adequate protection even though...

Second Circuit Affirms Unfavorable Plan Treatment of Senior Secured Creditor in DBSD North America

The Second Circuit Court of Appeals issued a summary order this week upholding the aggressively unfavorable treatment of a senior secured creditor under the reorganization plan (the "Plan") of DBSD North America, f/k/a ICO North America ("DBSD"). (The Second Circuit upheld a separate...

Prioritizing Creditors: The Doctrine of Equitable Marshaling

Excerpt: Under Article 9 (Secured Transactions) of the Uniform Commercial Code, the default rule for priority among secured creditors is the first-to-file-or-perfect. U.C.C. § 9-322 (a)(1) (Official Text 2009). In other words, the secured party that first files a financing statement in the...

The Dog That Didn't Bark - Second Circuit's Opinion in DBSD North America Disallows Gifting, But Is Silent on Cramdown of Secured Creditor

As discussed in previous posts on this site , back in December the Second Circuit Court of Appeals issued a summary order that reversed the bankruptcy court's confirmation of the reorganization plan (the "Plan") of DBSD North America, f/k/a ICO North America ("DBSD"). The...

Secured Lenders 101 - A Basic Review with Ancela Nastasi

On this edition, Ancela Nastasi, partner in the Restructuring and Bankruptcy Group at Richards Kibbe & Orbe LLP, explains "secured lender," intercreditor agreements, credit bidding, loan to own strategies and cram-down. Copyright© 2010 LexisNexis, a division of Reed Elsevier Inc. All...

River Rd. Hotel Partners, LLC v. Amalgamated Bank, 2011 U.S. App. LEXIS 13131 (June 28, 2011)

LexisNexis Overview: Bankruptcy court did not err in denying confirmation of Chapter 11 debtors' plans on the basis that they did not comply with the specific requirements of 11 U.S.C.S. § 1129(b)(2)(A)(ii) because debtors could not sell encumbered assets free and clear of liens without...

A Secured Creditor's Absolute Legal Right to Credit Bid (Part 2)

James Lawniczak considers the circuit split over whether a secured creditor has an absolute right to credit bid when its collateral is being sold through a chapter 11 reorganization plan. Looking in detail at the Seventh Circuit's decision in River Road Hotel Partners, which held that Bankruptcy...

Ancela Nastasi Discusses Credit Bidding and In re River Road HotelPartners, LLC

On this edition, Ancela R. Nastasi of Richards Kibbe & Orbe LLP in New York discusses the background and holding of the 7th Circuit U.S. Court of Appeals in In re River Road Hotel Partners, LLC . She analyzes the implications of the court's ruling upholding the right of a secured lender to credit...

JPMorgan Agrees To Pay Nearly $700M To Settle Claims With Lehman Brothers

NEW YORK - (Mealey's) JPMorgan Chase Bank NA on Feb. 1 agreed to pay nearly $700 million to bankrupt Lehman Brothers Holdings Inc. (LBHI) that JPMorgan had been previously paid for "purportedly secured claims against LBHI on the basis that, as 'affiliates' of JPMorgan Chase Bank,...

U.S. Supreme Court Considers Rights of Secured Creditors in Chapter 11 Bankruptcy

WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court today heard oral arguments in a dispute between a Chapter 11 debtor company and a creditor bank as to whether a secured creditor is permitted to credit-bid while the debtor company's collateral is being sold as part of the reorganization...

A Chicago Bankruptcy Case Lands at the US Supreme Court: The RadLAX Oral Argument - Part I

Chicago bankruptcy professionals descended on the US Supreme Court to catch the final chapter in the RadLAX bankruptcy saga, one that had a remarkably swift journey to the highest court of the land. The case started as the neglected stepchild of Amalgamated Bank, the trustee of the deeply undersecured...

RadLAX Oral Argument - Part II: What's Indubitably Bothering the Supreme Court Justices Equivalently

As I noted three years ago in my " What's Bothering Ruthie ? " post on Justice Ginsburg's one-liner that stopped the Chrysler sale dead in its tracks, today's Supreme Court oral argument in RadLAX Gateway Hotel, LLC v. Amalgamated Bank ( transcript ) left no doubt about what's...

Supreme Court Indubitably Grapples With Credit Bidding

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...

High Court: Debtor May Not Sell Property Free Of Lien; Must Allow Credit-Bidding

WASHINGTON, D.C. - The U.S.Supreme Court today affirmed that a debtor company may not obtain confirmation of a nonconsensual Chapter 11 plan that permits the debtor to sell collateral free and clear of a creditor bank's lien without permitting the bank to credit-bid at the sale ( RadLAX Gateway...

RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 2012 U.S. LEXIS 3944 (May 29, 2012)

LexisNexis Core Overview: Sales free of liens under 11 U.S.C.S. § 1129(b)(2)(A) [ an annotated version of this statute is available to lexis.com subscribers ] had to satisfy § 1129(b)(2)(A)(ii)'s requirements, not those of both § 1129(b)(2)(A)(ii) and (iii), thus, the debtors could...

LexisNexis® Bankruptcy Law Community Podcast: Kenneth Klee and Ancela Nastasi on the U.S. Supreme Court's decision in RadLAX Gateway Hotel LLC v. Amalgamated Bank.

On this edition, Ancela Nastasi of Fulbright & Jaworski and Kenneth Klee of Klee, Tuchin, Bogdanoff & Stern discuss the May 29, 2012 U.S. Supreme Court decision in RadLAX Gateway Hotel LLC v. Amalgamated Bank in which the court held that a secured creditor has a right to credit bid its secured...

None Too Appealing – District Court Turns Aside Free Lance-Star Publishing Credit Bid Lender

by Ben Feder 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...