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When Your Borrower Files for Bankruptcy (DIP Financing, Cash Collateral, and Adequate Protection)
What you need to know as a secured lender to a borrower who goes into bankruptcy you should know already, well in advance. If your borrower’s bankruptcy filing has taken you by surprise, please refer to my next article in this series, in which I will discuss the tactics and strategies in the contested case […]
Absolute Priority Rule in Bankruptcy: Are You Atop the List?
Editor’s Note: This is an updated version of an article published in May of 2013. If you are a vendor, service provider or another unsecured creditor to a chapter 11 debtor, you cannot be blamed for feeling like a duped lover after learning about the bankruptcy of your once devoted business companion. Despite the promises […]
A Creditors’ Guide for Claims Against Bankrupt Customers: Getting Claims Paid and Preventing Claw-Back of Payments Received
You recently shipped goods to a U.S. customer on credit. Now the customer is insolvent and evidently sliding into bankruptcy. As in baseball, at the close of the slide, the customer may be safe, continuing in business or sold as a going concern, or out, and facing liquidation. What to do? Included among the concerns […]
Limiting Credit Bidding “For Cause” After In re Aeropostale
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.”[2] A court may limit this right “for cause.”[3] The “for cause” standard is not defined in the Code […]
90 Second Lesson: Credit Bidding in Plan Sales
Editors’ Note: this is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to info@dailydac.com and we will try to answer it. QUESTION: A private equity investor wrote in recently asking us to address credit bidding in the aftermath of Radlax. ANSWER: Thanks to the 2012 […]
Dealing With Distress For Fun & Profit – Installment #9 – Secured Creditors & Chapter 11
A written tour of business bankruptcy and its alternatives Our prior installment discussed some of the basic things a secured creditor needs to know about Chapter 11. The automatic stay was one of them. But, since we like to keep these things short (on the presumption that others also have short attention spans) we didn’t […]
Dealing With Distress For Fun & Profit – Installment #8 – What Every Secured Creditor (And Its Lawyer) Should Know About Chapter 11
A written tour of business bankruptcy and its alternatives In our past few installments we’ve been approaching our topic in a more or less chronological manner, explaining what generally happens first, second, third, and so on. We think it useful to switch convention and spend this and the next few installments talking about things from […]
RECOMMENDED READING: How Fisker and Free Lance Star-Publishing Did Not Alter Credit-Bidding
The Editorial Staff of Commercial Bankruptcy Investor recently reviewed the seemingly earth-shaking Fisker and Free Lance Star-Publishing orders limiting credit bidding rights. The Editorial Staff concluded that much of the angst is misplaced and that credit bidders should try to be the least bit cool in credit bidding, in particular to avoid inequitable behavior in […]
Try to Be the Least Bit Cool: Credit Bidding Rights After Fisker and Free Lance Star-Publishing
Holders of secured debt now have two cases to make them nervous as to whether they got all they paid for with respect to their right to credit bid at a sale of the collateral in a section 363 sale in bankruptcy. It may appear that both courts chopped back credit bidding rights solely to […]
KUNEY’S CORNER – Cramming Down a Chapter 11 Plan by Giving Secured Creditor Substitute Collateral
Can a chapter 11 debtor confirm a plan that gives a hostile secured creditor a lien on an orange as a substitute, in essence, for the secured creditor’s lien on an apple that the debtor wants to keep and use?[i] Yes, if the value of the new lien meets the test of “indubitable equivalence” with […]