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Credit Bidding: Secured Creditor Beware

The right to credit bid under section 363(k) of the Bankruptcy Code can be an important safeguard that protects a secured creditor against the risk that its collateral may be undervalued at an asset sale, and courts have traditionally described a secured creditor's right to credit bid as fundamental and near absolute. However, as some bankruptcy courts have recently reminded us, the right is not absolute, and may be limited by the bankruptcy court "for cause" under section 363(k) of the Bankruptcy Code.

26 minute read April 02, 2015 at 12:00 AM
By
Linda V. Donhauser and Kristen M. Siracusa
Credit Bidding: Secured Creditor Beware

Credit bidding has historically been a valuable right afforded to secured creditors under the Bankruptcy Code and state law.

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