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Credit Bidding in Bankruptcy Sales: Asserting and Defending Against Credit Bids

Resolving Intercreditor Disputes and Taking Collective Action Under Syndicated Facilities

Recording of a 90-minute CLE webinar with Q&A

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Conducted on Wednesday, April 29, 2020

Recorded event now available

or call 1-800-926-7926

This CLE course will provide bankruptcy counsel with a review of strategic decision making in credit bidding, resolving the myriad of disputes among lenders and unsecured creditors, and overcoming legal challenges to the lender's right to credit bid.

Description

Credit bidding is a powerful tool for the secured lender but presents several challenges and pitfalls. The Supreme Court's RadLAX Gateway Hotel ruling provided some clarity for lenders' credit bidding in a sale under Section 1129(b)(2)(A). Although later decisions in Fisker Automotive Holdings and Free Lance-Star Publishing suggested that the potential to “chill” competing bids might constitute "cause" to limit secured lenders’ rights to credit bid in Section 363 sales, the ruling in Aeropostale appears to have squelched the notion that such rights can be denied in the absence of inequitable conduct.

Lender disputes in syndicated credit facilities are standard. Current case law addresses disputes between majority and minority lenders regarding consent to credit bid and the authority of the syndicate's agent to bind all lenders.

Intercreditor disputes are another hurdle that has only recently been tested in bankruptcy litigation.

Listen as our authoritative panel of bankruptcy practitioners discusses critical issues facing lenders in credit bidding in bankruptcy and offers best practices to protect the lenders' bid and resolve various disputes in the process.

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Outline

  1. Strategic decisions regarding credit bids
    1. Amount of bid
    2. Timing of bid
    3. Secured vs. undersecured claims
    4. Bidding for assets in addition to the lender's collateral
  2. Resolving disputes
    1. Collective action in syndicated loan facilities
    2. Intercreditor disputes: second lien holders
    3. Negotiations with committees of unsecured creditors
  3. Challenges to right to credit bid
    1. Philadelphia Newspapers and RadLAX Gateway Hotel L.L.C. v. Amalgamated Bank
    2. In re Fisker Automotive Holdings Inc. and In re Free Lance-Star Publishing Co.
    3. Denial of right to credit bid "for cause"
    4. In re Aeropostale
    5. Report of the ABI Commission to Study Reform of Chapter 11

Benefits

The panel will review these and other key questions:

  • What issues arise when the lender bids for a basket of assets that includes assets of value in addition to the lender's collateral?
  • What circumstances must exist for a credit bid to be restricted absent any indication of misconduct or challenges to the creditor's liens or claims?
  • What rights do minority lenders in a syndicated loan facility have to block the agent from credit bidding?
  • What are the trends in enforcing intercreditor agreements in bankruptcy?

Faculty

Feder, Benjamin
Benjamin D. Feder
Special Counsel
Kelley Drye & Warren

Mr. Feder focuses his practice on bankruptcy and restructuring matters and represents bank lenders, debtors,...  |  Read More

Zuccarello, Amy
Amy A. Zuccarello
Partner
Sullivan & Worcester

Ms. Zuccarello practices in the areas of business restructuring, workout and bankruptcy and represents creditors,...  |  Read More

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