High Court Considers if Secured Creditor Has Right to Credit Bid at Bankruptcy Auction

The U.S. Supreme Court heard oral argument April 23 on what the bankruptcy community is calling the most important business bankruptcy case since 1999: whether a secured creditor must be allowed to credit bid when a debtor’s Chapter 11 reorganization plan proposes to sell assets free and clear of all liens but precludes credit bidding by providing the creditor with the proceeds of the sale as the “indubitable equivalent” of its claim (RadLAX Gateway Hotel LLC v. Amalgamated Bank).

The court focused many of its questions to the petitioner/debtor on the details of the bankruptcy bidding and auction ...