Dissenting Secured Creditors Should Not Be Stripped of Rights to Credit-Bid Their Claims According to Latest ABI Quick Poll
Contact: John Hartgen
DISSENTING SECURED CREDITORS SHOULD NOT BE STRIPPED OF RIGHTS TO CREDIT-BID THEIR CLAIMS, ACCORDING TO LATEST ABI QUICK POLL
October 12, 2010, Alexandria, Va. — Fifty-three of respondents to ABI’s latest Quick Poll thought that a dissenting class of secured creditors should not be stripped of rights to credit-bid its claims under a reorganization plan that proposes an auction sale of the creditors’ collateral free and clear of liens. Thirty-seven percent “strongly disagreed” and 16 percent “disagreed somewhat” that dissenting secured creditors could be stripped of rights to credit-bid their claims under a reorganization plan that proposes an auction sale of creditor’s collateral free and clear of liens.
Credit bidding is a process that allows a secured creditor to bid the full face value of their claim against a debtor, including the unsecured deficiency portion, rather than putting up cash or other currency at a sale of the debtor’s assets. Earlier this year in the case of In re Philadelphia Newspapers, the U.S. Circuit Court of Appeals for the Third Circuit affirmed a bankruptcy court ruling that Section 1129 (b)(2)(a) did not require that the lenders have the right to credit bid their claims in a reorganization plan- approved sale.
Thirty-eight percent of respondents, however, agreed that a dissenting class of secured creditors can be stripped of any right to credit bid their claims under a plan that proposes an auction sale of the creditors’ collateral free and clear of liens. Twenty percent “agreed somewhat” and 18 percent “strongly agreed” on the issue. Six percent did not know or had no opinion on the issue.
ABI members and members of the public were welcome to submit their response to the statement: “A dissenting class of secured creditors can be stripped of any right to credit-bid its claims under a plan that proposes an auction sale of the creditors’ collateral free and clear of liens. In re Philadelphia Newspapers, 599 F.3d 298.”
ABI’s Quick Poll is posted on ABI’s home page, www.abiworld.org. ABI members and the public are invited to respond to a question on a timely bankruptcy or insolvency issue. Visit http://www.abiworld.net/quickpoll/ to access the results of previous ABI Quick Polls.
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