Supreme Court Decision Alert - May 29, 2012

Originally published May 29, 2012

Keywords: bankruptcy, credit bid, Chapter 11,

Today the Supreme Court issued one decision, described below, of interest to the business community.

Bankruptcy – Right to Credit Bid in Chapter 11

RadLAX Gateway Hotel, LLC v. Amalgamated Bank, No. 11-166 (previously discussed in the December 13, 2011 Docket Report).

In general, a bankruptcy plan may be confirmed only if all of the debtor's secured creditors agree to the plan. But Section 1129(b) of the Bankruptcy Code allows the confirmation of a non-consensual plan—colloquially known as a "cramdown" plan—if the plan is deemed "fair and equitable." 11 U.S.C. § 1129(b). To be confirmed over the objection of secured creditors, a cramdown plan must satisfy one of three conditions, each of which is set forth in a distinct sub-clause of Section 1129(b). Clause (i) requires, among other things, that the secured creditors' lien survive the sale of the debtor's property. Clause (ii)