In what it described as “an easy decision,” the U.S. Supreme Court issued its eagerly anticipated decision in RadLAX Gateway Hotel, LLC et al. v. Amalgamated Bank1 on May 29, 2012.
Recently, the Supreme Court of the United States held that a debtor cannot confirm a Chapter 11 “cramdown” plan that provides for the sale of collateral free and clear of a secured creditor’s lien when it denies the secured creditor’s right to credit bid at the auction. This should be welcome news to members of the secured lending community because guaranteeing the right of secured creditors to credit bid will reduce the risk of making such loans.
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In a major victory for secured creditors, the United States Supreme Court, on May 29, 2012, unanimously held that a chapter 11 plan involving a sale of secured property must afford the secured creditor the right to credit bid for the property under section 363(k) of title 11 of the United States Code (the “Bankruptcy Code”).1 In so holding, the Supreme Court resolved the split that had emerged among the United States Circuit Courts of Appeals, as illustrated by the Seventh Circuit’s decision below,2 which contrasted with recent decisions from the Third and Fifth Circui
In a decision of considerable importance for bankruptcy debtors and lenders, the Supreme Court handed down its ruling earlier today in RadLAX Gateway Hotel, LLC v. Amalgamated Bank, --- S.Ct. ----, 2012 WL 1912197 (2012). In this highly anticipated decision, the Supreme Court held that a debtor may not confirm a plan under the “cramdown” provision of 11 U.S.C. § 1129(b)(2)(A) where the plan proposes to sell a secured lender’s collateral without affording the creditor the opportunity to credit-bid for the collateral.
On May 29, 2012, the United States Supreme Court resolved a split among the federal courts of appeals on an important bankruptcy issue, agreeing with arguments Morrison & Foerster advanced on behalf of Amalgamated Bank. In a unanimous opinion in RadLAX Gateway Hotel, LLC v. Amalgamated Bank,1 the Court held that a Chapter 11 plan of reorganization that provides for a sale of a secured creditor’s collateral free and clear of liens must afford that secured creditor the right to credit bid.
The Supreme Court held 8-0 that section 1129(b)(2) of the bankruptcy code requires that if a debtor proposes to sell property under a plan of reorganization it must permit secured lenders to submit credit bids in the sale process. The outcome is consistent with our views of the rights of secured lenders under appropriate bankruptcy practice – however, the Supreme Court’s analysis eschews policy concerns and focuses almost exclusively on the plain language of the statute and applicable canons of statutory construction.
On May 29, 2012, the United States Supreme Court upheld a secured creditor’s absolute right to credit bid when a debtor files a Chapter 11 plan proposing to sell the secured creditor’s collateral free and clear of the secured creditor’s liens. RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. ___ (2012). In just a little over one month since oral argument, the Supreme Court resolved a conflict between two circuit courts of appeal as to whether a plan could prohibit a secured creditor from credit bidding on its collateral at a sale.
Today, the Supreme Court of the United States issued its much awaited decision in RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. ______ (2012). The noteworthy decision resolves any uncertainty surrounding a secured creditor’s right to credit bid in a sale under a chapter 11 plan which arose after cases like Philadelphia Newspapers 599 F.3d 298 (3d Cir. 2010) curtailed the right.
In a unanimous decision, the U.S. Supreme Court held that debtors may not obtain confirmation of a Chapter 11 cramdown plan that provides for the sale of collateral free and clear of a creditor’s lien but does not permit the creditor to credit-bid at the sale. InRadlax Gateway Hotel, LLC et al. v.
In re Vitro, S.A.B de C.V v. ACP Master, Ltd., et al., Case No. 11-33335-HDH-15 (N.D. Tex. 2011), is a decision by a bankruptcy court but contains discussion of the issue often arising in contentious international litigation: attempts to enjoin proceedings in other countries in favor of proceedings in the U.S., or attempts to enjoin proceedings in the U.S.