Law.com Subscribers SAVE 30%

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

LJN NewslettersNewsSectionsThe Bankruptcy Strategist

Limiting Credit Bidding for 'Cause' Under Section 363(k)

BY Christopher M. Cahill
August 02, 2015

Recently, the ABI Commission to Study the Reform of Chapter 11 released its 2012-2014 Final Report and Recommendations. There, the Commission acknowledged “the fundamental role of credit bidding under state law and section 363(k)” and that “all credit bidding chills an auction process to some extent.” Final Report at 146-47. The Commissioners stated that they did “not believe that the chilling effect of credit bids alone should suffice as cause under section 363(k).” Id. The Commissioners implicitly rejected the contrary reading of “cause” tendered by the Third Circuit in In re Philadelphia Newspapers, LLC, 599 F.3d 298 (2010) and both cited and seemingly applied, to some degree, in In re Fisker Automotive Holdings, Inc., 510 B.R. 55 (Bankr. D.Del. 2014) and in In re The Free Lance-Star Publishing Co. of Fredericksburg, VA, 512 B.R. 798 (Bankr. E.D. Va. 2014).

Throughout the present discussion, we will refer to the reading of “cause” tendered in Philadelphia Newspapers and rejected by the ABI Commission as the “In and Of Itself” reading, for it would justify a finding of “cause” to limit credit bidding in a bankruptcy sale based on the chilling effect of credit bidding in and of itself.

We agree with the Commission's rejection of the In and Of Itself reading of “cause” in section 363(k). Below, we trace the outlines of arguments that: 1) the In and Of Itself reading of “cause” has no precedent prior to Philadelphia Newspapers and is scarcely supported there; and 2) application of the In and Of Itself reading is not justified on policy grounds, as is proposed by Philadelphia Newspapers.

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
Yachts, Jets, Horses & Hooch: Specialized Commercial Leasing Models Image

Defining commercial real estate asset class is essentially a property explaining how it identifies — not necessarily what its original intention was or what others think it ought to be. This article discusses, from a general issue-spot and contextual analysis perspective, how lawyers ought to think about specialized leasing formats and the regulatory backdrops that may inform what the documentation needs to contain for compliance purposes.

Hyperlinked Documents: The Latest e-Discovery Challenge Image

As courts and discovery experts debate whether hyperlinked content should be treated the same as traditional attachments, legal practitioners are grappling with the technical and legal complexities of collecting, analyzing and reviewing these documents in real-world cases.

Identifying Your Practice's Differentiator Image

How to Convey Your Merits In a Way That Earns Trust, Clients and Distinctions Just as no two individuals have the exact same face, no two lawyers practice in their respective fields or serve clients in the exact same way. Think of this as a "Unique Value Proposition." Internal consideration about what you uniquely bring to your clients, colleagues, firm and industry can provide untold benefits for your law practice.

Risks and Ad Fraud Protection In Digital Advertising Image

The ever-evolving digital marketing landscape, coupled with the industry-wide adoption of programmatic advertising, poses a significant threat to the effectiveness and integrity of digital advertising campaigns. This article explores various risks to digital advertising from pixel stuffing and ad stacking to domain spoofing and bots. It will also explore what should be done to ensure ad fraud protection and improve effectiveness.

Turning Business Development Plans Into Reality Image

This article offers practical insights and best practices to navigate the path from roadmap to rainmaking, ensuring your business development efforts are not just sporadic bursts of activity, but an integrated part of your daily success.