In the March/April 2014 edition of the Business Restructuring Review, we discussed an important ruling from a Delaware bankruptcy court restricting a creditor’s right to credit bid an acquired claim in bankruptcy sale of the underlying collateral. In In re Fisker Automotive Holdings, Inc., 2014 BL 13998 (Bankr. D. Del. Jan. 17, 2014), leave to app. denied, 2014 BL 33749 (D. Del. Feb. 7, 2014), certification denied, 2014 BL 37766 (D. Del. Feb. 12, 2014), the bankruptcy court limited the amount of the credit bid to the discounted purchase price actually paid for the debt.

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 debt was acquired at a discount for such expr

A brewing hot topic in bankruptcy law is how a Debtor deals with property that is collateral for a secured creditor which is surrendered but has not yet been legally foreclosed or repossessed by the creditor. The Debtor’s interest is obvious: to avoid accruing post petition obligations, such as taxes, insurance, and homeowner’s association dues.

Recently, a chink to the armor of distressed debt purchasers resonated throughout the secondary market with the decision of the Delaware Bankruptcy Court in In re Fisker Automotive Holdings, in which the bankruptcy court limited the right to credit bid of

It has not taken long for another bankruptcy court to question the propriety of allowing secured creditors to credit bid their loans. You may recall that in the case of Fisker Automotive Holdings, Inc., et al. a Delaware bankruptcy court limited a creditor’s ability to credit bid based on self-serving testimony from a competing bidder that it would not participate in an auction absent the court capping the secured creditor’s credit bid.

Earlier this year, we reported on a decision limiting a secured creditor's right to credit bid purchased debt (capping the credit bid at the discounted price paid for the debt) to facilitate an auction in Fisker Automotive Holdings' chapter 11 case.¹ In the weeks that followed, the debtor held a competitive (nineteen-round) auction and ultimately selected Wanxiang America Corporation, rather than the secured creditor, as the w

The United States Bankruptcy Court for the Eastern District of Virginia (the “Court”) issued an opinion limiting the ability of a “loan to own” secured creditor to credit bid at an auction for the sale of substantially all of the debtors’ assets.¹ The Court focused on the fact that the creditor’s conduct interfered with the sale process and was motivated by its desire to “own the Debtors’ business” rather than to have its d

Once might be considered an aberration. Is twice the new normal?

A recent opinion out of the United States Bankruptcy Court for the Eastern District of Virginia (Richmond Division) serves as a reminder to secured creditors to steer clear of conduct that a bankruptcy court may deem inequitable and provide the court with cause to limit the secured creditor’s credit bid rights.  In In re The Free Lance-Star Publishing Co.

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 that appeared to have been firmly r