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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 Longview Ultra I
Construction Loan Investment Fund (having about $100 million of collateral to
support a $300 million original investment).
Following Chief Judge Black's rejection of RadLAX's
sister debtor's (River Road) attempt to jam Amalgamated with a plan that
sold the hotel while denying the Bank its proclaimed right to credit bid its
claim at auction, Amalgamated proposed its own plan (which was confirmed last
July with the Bank effectively "buying" the Debtor's assets through
credit bid, thus mooting out any appeal of Chief Judge Black's denial of River
Road's original cram down plan). For whatever reason, however, the Bank
in the RadLAX sister case had no interest in confirming its own credit bid
plan, thereby leaving the RadLAX debtor to its own devices, which
ultimately meant a trip to the Seventh Circuit. The Seventh Circuit
sided with Amalgamated, and the Supreme Court agreed to hear the appeal in
order to resolve a split in the federal appellate courts as to whether a debtor
can ever propose a cram down plan that offers the lender's collateral for sale
at auction without concurrently giving the lender the right to credit bid in
its claims at the auction.
Unlike the lender, which had the support in amicus briefs
of some of the most notable bankruptcy professors and scholars to grace a
classroom (Lieb, Klee, Baird, Sharfman, Kuney, to name a few), the RadLAX
debtor had no official support today--other than the down and out debtor
hunched on the sidewalk in front of the Supreme Court succinctly imploring the
Justices to "Stop Predatory Credit Bidding Now"!
The oral argument, which started at 10:02 am sharp and
lasted 59 minutes, had more Chicago bankruptcy professionals in the room than
were probably in Chicago bankruptcy court today (given the dearth of active
commercial cases these days). These included:
Other bankruptcy professionals in attendance included
Craig Goldblatt, Prof. Eric Brunstad, fellow bloggers Peter Friedman and Doug
Mintz of Cadwalader, Gary Holzer, and of course, Adam Lewis and Norm Rosenbloom
for Amalgamated, and many others.
Part II of this post will focus on what's bothering the
always something bothering them!) as gleaned from the key points around
which the Justices' questions continually revolved.
Meanwhile, don't forget to sign up for tomorrow's first
webinar (April 24) to discuss today's arguments at the Court, sponsored by
Wilmer Hale and LSTA, and featuring LSTA's Elliot Ganz and WilmerHale Partners
Craig Goldblatt and Danielle Spinelli (all of whom were on an amicus
brief filed with the Court for a number of leading financial industry trade
associations). Here is the link
to the webinar.
Thanks for reading!
Read RadLAX Oral Argument - Part II: What's Indubitably Bothering the Supreme Court Justices Equivalently
To read more items by Steve Jakubowski, visit the
Bankruptcy Litigation Blog
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