The Impact of Philadelphia Newspapers on Chapter 11 Asset Sales


On March 22, the United States Court of Appeals for the Third Circuit issued a decision that could significantly impact the rights of secured creditors to credit bid in connection with Chapter 11 asset sales under a plan of reorganization. It is unclear whether other circuits will adopt the Third Circuit’s decision in Philadelphia Newspapers, LLC,1 however, this decision has the potential of being a impediment for lenders and other funds that desire to take ownership of assets as a means to protect their collateral position, and for those funds and other creditors that seek to employ a “loan-to-own” strategy.

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