Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Credit Bid Buyers Beware: Delaware Bankruptcy Court Caps Credit Bid

By Adam C. Harris, David M. Hillman and James T. Bentley
May 02, 2014

On Jan. 10, 2014, the United States Bankruptcy Court for the District of Delaware (the bankruptcy court) in In re Fisker Automotive Holdings, Inc., et al., capped a secured creditor's right to credit bid its $168 million claim at only $25 million (the amount it paid to purchase the claim). The secured creditor immediately appealed to the district court. As a procedural matter, the secured creditor had an absolute right to have its appeal heard only if the bankruptcy court's ruling was considered a “final order.” If it was not a “final order,” then the district court had discretion to hear the merits of the appeal. On Feb. 7, 2014, the district court determined that the bankruptcy court order was not final, and declined to hear the appeal. In doing so, however, the district court made sweeping statements regarding the bankruptcy court's authority to limit or otherwise deny a secured creditor the right to credit bid. Eleven days later, the bankruptcy court approved the sale of the debtors' assets to a third party. The secured creditor has since consented to the sale and withdrawn its appeal.

While the bankruptcy court has stated that its decision is non-precedential, it serves as a cautionary tale for secured lenders who may want to credit bid to acquire a debtor's assets.

Facts

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Major Differences In UK, U.S. Copyright Laws Image

This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.

Strategy vs. Tactics: Two Sides of a Difficult Coin Image

With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.

The Article 8 Opt In Image

The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.

Removing Restrictive Covenants In New York Image

In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?

Fresh Filings Image

Notable recent court filings in entertainment law.