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Pennsylvania district court denies secured creditors’ right to credit bid in sale auction where debtors had proposed to provide them the “indubitable equivalent” of their claims under plan of reorganization

On Nov. 10, 2009, a Pennsylvania district court held that secured creditors do not have an absolute right to credit bid1 their debt under the Bankruptcy Code (the “Code”) in an asset sale conducted pursuant to a “cramdown” plan of reorganization that proposes to provide the secured creditors with the “indubitable equivalent” of their claims. In re Philadelphia Newspapers, LLC, Civil Action 09-00178 at 57 (E.D. Pa. Nov. 10, 2009). This decision is on appeal to the Third Circuit Court of Appeals.

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USA, Pennsylvania, Insolvency & Restructuring, Litigation, Schulte Roth & Zabel LLP, Credit (finance), Debtor, Collateral (finance), Limited liability company, Debt, Fair market value, Secured creditor, Secured loan, Title 11 of the US Code, United States bankruptcy court, Third Circuit
Florida bankruptcy judge holds ‘savings clause’ unenforceable when voiding guarantees as fraudulent transfers

A Florida bankruptcy court, on Oct. 13, 2009, issued a 182-page decision after a 13-day trial, among other things, avoiding on fraudulent transfer grounds (a) secured subsidiary guarantees of $500 million and (b) $420 million pre-bankruptcy payments. In re Tousa, Inc., et al., Case No. 08-10928; Adv. P. 08-1435 (S.D. Fla. Oct. 13, 2009). The decision is on appeal to the district court.  

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USA, Florida, Banking, Insolvency & Restructuring, Litigation, White Collar Crime, Schulte Roth & Zabel LLP, Bankruptcy, Surety, Debtor, Debt, Joint venture, Line of credit, Joint and several liability, Subsidiary, Secured loan, United States bankruptcy court