Third Circuit Holds Section 1129(b)(2)(A) of the Bankruptcy Code Does Not Provide Secured Lenders With a Legal Entitlement to Credit Bid at an Auction Sale Pursuant to a Plan of Reorganization

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Does a secured creditor have an absolute right to acquire its collateral, which is sold pursuant to a plan of reorganization, by credit bidding its debt? The Third Circuit Court of Appeals, in a strict constructionist opinion, has just answered this question in the negative.

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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.

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