Contact: John Hartgen
703-894-5935
BREAKUP FEES SHOULD BE ALLOWED ONLY IF THEY
ENCOURAGE A STALKING-HORSE BIDDER TO ENTER INTO A TRANSACTION OR ADHERE
TO ITS BID, ACCORDING TO LATEST ABI QUICK POLL
September 20, 2010, Alexandria, Va. - Eighty percent
of respondents to ABI's latest Quick Poll agreed that breakup fees
should be allowed only if they are necessary to induce a stalking-horse
bidder either to enter into a transaction or to adhere to its bid after
the court orders an auction. Forty-one percent “agreed
strongly” and 39 percent “somewhat agreed” that
breakup fees should only be allowed to hold a stalking-horse bidder
responsible for its bid or to entice bidders to enter into a
transaction.
Earlier this year in the case of In re Reliant Energy Channelview
LP, 09-2074, the U.S. Appeals Court for the Third Circuit affirmed
a bankruptcy court's denial of a bidder's request for the disbursement
of administrative expenses in the form of a break-up fee from the
estate. The appeals court said that the bankruptcy court did not abuse
its discretion when it concluded that an award of a break-up fee was not
necessary to preserve the value of the estate.
Only 11 percent of respondents disagreed that breakup fees should
only be allowed if they are necessary to encourage a stalking-horse
bidder either to enter into a transaction or to adhere to its bid after
the court orders an auction. Nine percent “disagreed
somewhat” and two percent “strongly disagreed” on the
issue. Five percent did not know or had no opinion on the issue.
ABI members and members of the public were welcome to submit their
response to the statement: “Breakup fees are allowed only if they
are necessary to induce a stalking-horse bidder either to enter into a
transaction or to adhere to its bid after the court orders an auction.
In re Reliant Energy Channelview, 594 F.3d 200.”
ABI's Quick Poll is posted on ABI's home page,
href='http://www.abiworld.org/'>www.abiworld.org. ABI members and
the public are invited to respond to a question on a timely bankruptcy
or insolvency issue. Visit
href='http://www.abiworld.net/quickpoll/'>http://www.abiworld.net/quickpoll/
to access the results of previous ABI Quick Polls.
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ABI is the largest multi-disciplinary, nonpartisan organization
dedicated to research and education on matters related to insolvency.
ABI was founded in 1982 to provide Congress and the public with unbiased
analysis of bankruptcy issues. The ABI membership includes more than
12,600 attorneys, accountants, bankers, judges, professors, lenders,
turnaround specialists and other bankruptcy professionals, providing a
forum for the exchange of ideas and information. For additional
information on ABI, visit
href='http://www.abiworld.org/'>www.abiworld.org. For additional
conference information, visit
href='http://www.abiworld.org/conferences.html'>http://www.abiworld.org/conferences.html