Bankruptcy Client
Alert
May 29,
2012
Supreme Court
Unanimously Upholds Right of Secured Creditor to
Credit Bid in Sale Under Chapter 11 Plan
Michael H.
Reed | [email protected]
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. In Radlax Gateway Hotel, LLC et al. v.
Amalgamated Bank, a closely watched case attracting wide
interest from the bankruptcy bar, the Court
resolved an issue that had split the lower courts,
upholding a decision of the Seventh Circuit,
River Rd. Hotel Partners, LLC v. Amalgamated
Bank, and departing from
the holding of the Third Circuit in In re
Philadelphia Newspapers, LLC.
Read more.
Third Circuit Issues
Important Ruling on Collateral Valuation and
Lien-Stripping in Chapter 11
Cases
Michael H.
Reed |
[email protected]
The United States Court of Appeals for the Third Circuit recently issued an important decision on the valuation of collateral of secured creditors and "lien-stripping" in Chapter 11 cases. In In re Heritage Highgate, Inc.,the court held that in a Chapter 11 case, the value of a secured creditor's collateral under §506(a) of the Bankruptcy Code was the fair market value of the property as established by expert testimony and it was permissible to "strip the lien" of the creditor where it was unsupported by collateral value. The court also clarified the burden of proof with respect to collateral valuations under §506(a) of the Bankruptcy Code.