High Court Backs Lenders' Power To Credit Bid In Ch. 11

Law360, New York (May 29, 2012, 1:48 PM EDT) -- By ruling that secured creditors must be allowed to bid on assets in a bankruptcy using only outstanding debt, the U.S. Supreme Court on Tuesday put an end to a circuit split it said “defied common sense," removing a potential spanner from the bankruptcy works.

In a unanimous 8-0 ruling in RadLAX Gateway Hotel LLC v. Amalgamated Bank, the high court ruled that a fair and equitable bankruptcy auction must allow for secured creditors to enter credit bids — the equivalent of what they are owed...
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