Bankruptcy Credit Bidding Post Fisker: Strategies for Protecting a Credit Bid or Making For Cause Challenges

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

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Conducted on Wednesday, July 29, 2015

Recorded event now available

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Course Materials

This CLE course will provide finance and lending counsel with a briefing on the evolution of credit bidding with a focus on the Fisker Automotive ruling and subsequent case law developments. The panel will discuss the impact of recent rulings on the distressed debt market as well as other secured lenders who may have their claims challenged for cause.

Description

2014 Fisker Automotive ruling by the Delaware bankruptcy court imposed a fact based analysis which denied investors holding debt the right to credit bid the full value of their holdings. Using the cause exception, the court instead limited the creditor’s right to bid only the amount for which it purchased the debt.

Since Fisker, several bankruptcy courts have likewise capped the amount of a secured creditor’s credit bid, most notably in the Free-Lance-Star Publishing and RML Development cases. The recent challenge to Standard General hedge fund’s right to credit bid for RadioShack’s name and customer data is illustrative of the continued battle over credit bidding.

Debt investors can take steps to mitigate the Fisker limitations, such as ensuring a commercially reasonable sales process with a reasonable bidding timeline and incentivizing the debtor with post-bankruptcy financing with conditions protecting the right to credit bid.

Listen as our authoritative panel of finance practitioners discusses recent developments in credit bidding after Fisker and its progeny, its impact on distressed debt investors and secured lenders, and best practices for minimizing a for cause challenge to a credit bid.

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Outline

  1. Overview of the Fisker Automotive ruling
  2. Case law developments post-Fisker
    1. Free Lance-Star Publishing Co. (E.D. Va. April 2014)
    2. RML Development (W.D. Tenn. July 2014)
    3. Adkins Corp. (5th Cir. 2015)
  3. Effective loan-to-own strategies that minimize a credit bid challenge
  4. Effective arguments for other creditors to challenge a credit bid

Benefits

The panel will review these and other key issues:

  • What case law guidance is there regarding the scope of the “cause” exception to a creditor’s right to credit bid under Section 363(k) of the Bankruptcy Code?
  • How can distressed debt investors minimize a potential for cause challenge to its right to credit bid?
  • What are best arguments for other creditors to successfully challenge a lender’s right to credit bid?
  • What are the takeaways from Fisker and its progeny for secured lenders in protecting their right to credit bid?

Faculty

Ronald S. Gellert
Ronald S. Gellert
Member
Gellert Scali Busenkell & Brown

Mr. Gellert is an experienced commercial attorney with a broad background of matters in most of the Delaware,...  |  Read More

Ben Rosenblum
Ben Rosenblum
Partner
Jones Day

Mr. Rosenblum represents debtors, creditors and other parties in interest in court supervised proceedings, out-of-court...  |  Read More

Selbst, Stephen
Stephen B. Selbst
Partner
Herrick, Feinstein

Mr. Selbst has more than 30 years of experience representing debtors, creditors, official committees, distressed...  |  Read More

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