Managing Credit Bids When Secured Creditors Clash

Law360, New York (November 12, 2009, 4:18 PM EST) -- On Sept. 23, 2009, the U.S. Bankruptcy Court for the District of Delaware (Walsh, J.) ruled that holders of secured notes issued by Electroglas Inc. under a secured indenture, could not – by themselves – credit bid their debt under Section 363(k) of the Bankruptcy Code.

Instead, according to the ruling, only the indenture trustee could submit the credit bid, and it declined to do so in the context of continued disputes between two groups of noteholders.

In the Electroglas bankruptcy case, two noteholder groups did...
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