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Search Results for: "Credit bid"

Questionable Right to Credit Bid

90 Second Lesson: The (Arguable) Right to Credit Bid in Plan Sales

Understanding the Right to Credit Bid After Radlax [Editor’s Note: this is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to [email protected] and we will try to answer it.] Question A private equity investor wrote in recently asking us to address credit bidding in the […]


Chilled bidding

Limiting Credit Bidding in Section 363 Bankruptcy Sales Post-In Re Aéropostale, Inc.

Chilled Credit Bidding and the Section 363 Sale Section 363(k) of the Bankruptcy Code (the “Code”) allows a secured creditor to bid at a section 363 sale and use the amount of their claim to offset the purchase price at the sale, called “credit bidding.” A court may limit this right “for cause.” The “for […]


Fisker Auto. Holdings 363 sale credit bid

The Fisker Case: My Credit Bid Capped at the Amount I Paid for the Debt?

Should Secured Creditors and Buyers of Distressed Assets Worry About Facing Limits On Their Credit Bids? One way to purchase assets (including the assets of a business as a going concern) is to prevail at a foreclosure sale or a § 363 bankruptcy auction with a credit bid. The first step is to acquire the […]


Credit Bid

To purchase one’s collateral without cash. The term “credit bid” is a colloquial term (it does not appear in the Bankruptcy Code) for a secured creditor’s right to bid at the sale of its collateral and then, at closing, to offset the purchase price by the value of its outstanding claim secured by the collateral being […]


Delaware Court Approval

Determining Whether or Not to Seek Court Approval of a Sale in a Delaware Assignment for the Benefit of Creditors Case

Is Court Approval Necessary for a Sale in a Delaware ABC Case? For many small insolvent companies, an assignment for the benefit of creditors (ABC) can be more attractive than a federal bankruptcy case to maximize value and sell or liquidate a business. Depending on the state—this article will focus on Delaware ABCs—special rules may […]


Court rejects debtor’s choice of bidder

The Northwest Company LLC – Court Rejects Debtors’ Choice of Successful Bidder, Names Formerly Back-Up Bidder Ashford as Auction Winner

August 25, 2020 – In an unusual twist to an unusual asset sale process, the Court hearing the Northwest Company cases approved the $31.46mn sale of the Debtors’ assets to Ashford Textiles, LLC and Ashford Partners, LLC (together, “Ashford” or “Purchaser”) [Docket No. 301]. The asset purchase agreement (the “APA”) governing terms of the sale […]


Kuney’s Corner: The Secured Creditor’s Counter Strike – Section 1111(b) Election

Section 1111(b) Election: A Countermeasure for Undersecured, Secured Creditors   Mathew 5:29 – And if thy right eye offend thee, pluck it out, and cast it from thee: for it is profitable for thee that one of thy members should perish, and not that thy whole body should be cast into hell. In a previous […]


Wind Turbine LLC tries to challenge a 363 sale

Can You Challenge a Section 363 Sale? Bid Now or Forever Hold Your Peace

How Natural Chem Holdings Tried to Beat the Wind in a 363 Sale Appeal    You would like to buy wind turbines in a lease-to-own scenario—that is, you would like to take possession of certain items and pay over time or in a lump-sum at some point in the future. You prefer this mode to […]


An investor hands over keys to a distressed asset as part of an assignment for the benefit of creditors, or ABC

Selling Distressed Assets: The Assignment for the Benefit of Creditors Alternative

An Alternative to Chapter 11 and Chapter 7 Liquidations Financially distressed companies faced with unlikely prospects for reorganization – and the creditors who can influence their decisions – often take advantage of the chapter 11 liquidation option, where the debtor’s assets can be sold free and clear of all liens, claims, and encumbrances. This leaves […]


Debtor crams down plan like hammer on egg

Kuney’s Corner – Cram Down: When the Creditor Says ‘No’

The Legal Requirements to Cram Down a Plan on Creditors   By filing a chapter 11 petition, the debtor seizes the initiative in proposing a reorganization plan—which is to provide how soon, in what amount and in what manner creditors’ claims are paid.[i] But a debtor does not necessarily get its way. A class of […]


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