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ARTICLE · 11 MARCH 2014

Fisker Bankruptcy Update: Should Secured Creditors Really Be Concerned?

Thompson Coburn LLP
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The opinion by the Delaware bankruptcy court in In re Fisker Auto. Holdings, Inc., raised alarm bells for secured creditors throughout the country.

United StatesInsolvency/Bankruptcy/Re-Structuring
Thompson Coburn LLP
Thompson Coburn LLP
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The opinion by the Delaware bankruptcy court in In re Fisker Auto. Holdings, Inc., raised alarm bells for secured creditors throughout the country. Many worry that it will diminish the valuable right of secured creditors to credit bid, which is the right to bid up to the amount of a secured claim without paying cash. But when reviewing the facts of the case, the court's decision may be limited to the very unusual facts and may not affect credit bidding rights in the normal case.

The Fisker bankruptcy case was filed for the purpose of selling substantially all of the Debtors' assets to Hybrid Tech Holdings, LLC. In October 2013, prior to the bankruptcy, Hybrid paid $25 million to the U.S. Department of Energy to buy Fisker's $168.5 million in debt. Consequently, Hybrid became the Debtors' senior secured lender and would have the right to credit bid at a Section 363 sale.

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