Supreme Court Confirms Credit Bid Rights of Secured Creditors


The United States Supreme Court, in the case of Radlax Gateway Hotel, LLC v. Amalgamated Bank (“Radlax”), ruled that secured creditors have the same right to credit bid in collateral sales under a plan of reorganization as they do in sales under Section 363 of the Bankruptcy Code (“Section 363 Sales”). In doing so, the Court rejected the argument that the Bankruptcy Code (the “Code”) provided Chapter 11 debtors with the alternative of offering the secured creditor the “indubitable equivalent” of its claim, finding that the structure of the relevant Bankruptcy Code section precluded that interpretation.

The Radlax decision reaffirms the credit bidding rights of secured creditors, which provide a disincentive to “bottom feeders” to offer inadequate bids since they will be faced with the prospect of being outbid by the secured creditor. This may have the effect of encouraging more 363 Sales, which can liquidate assets faster, easier, and less expensively than a full blown plan confirmation process.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Manatt, Phelps & Phillips, LLP | Attorney Advertising

Written by:


Manatt, Phelps & Phillips, LLP on:

Popular Topics
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.