Seventh Circuit Disagrees with Third on Selling Collateral Without Credit Bidding in a Cramdown: Rule of Philly Papers Rejected

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The Bankruptcy Code provides that a Chapter 11 plan of reorganization may be confirmed over the opposition of a class of secured creditors whose secured claims are not being paid in full only if it provides one of the following--

(a) the secured creditors shall retain their liens to secure a right to receive a future stream of payments in an aggregate amount of at least the value of their secured claims and a present value of at least the value of their collateral;

(b) the secured creditors' collateral is sold, free and clear of their liens but subject to their right to "credit bid" at the resulting auction, with their liens transferred to the proceeds of sale; or

(c) realization by the secured creditors of the "indubitable equivalent" of their secured claims....

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