Business Litigation

Ruling Protects Secured Creditors' Rights

Court grants right to 'credit-bid' under bankruptcy sale plan

, The Connecticut Law Tribune


When a Chapter 11 debtor proposes to sell secured assets prior to confirmation of a plan, it may not do so without providing its secured creditor with the right to "credit-bid" for the assets. 11 U.S.C. §363(k). "Credit-bid" in this context means bidding for the assets by a credit of up to the full amount of the secured creditor's claim, even when the value of its collateral is worth less, and notwithstanding the general rule in bankruptcy that an allowed secured claim is limited to that value.

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