The Effect Of Philly News On Credit Bidding

Law360, New York (July 8, 2010, 7:25 PM EDT) -- The U.S. Court of Appeals for the Third Circuit recently affirmed a lower court’s ruling in In re Philadelphia Newspapers LLC.[1] The court allowed Philadelphia Newspapers LLC to require all-cash bids for the asset sale under its proposed plan. This precluded secured creditors from credit bidding, as long as the plan provided those creditors with the “indubitable equivalent” of the value of their claims.

In sanctioning a mechanism that would allow the debtor to trump the Bankruptcy Code’s credit bidding requirements, this decision may erode the...
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