Contact: John Hartgen
703-894-5935
DISSENTING SECURED CREDITORS SHOULD NOT BE
STRIPPED OF RIGHTS TO CREDIT-BID THEIR CLAIMS, ACCORDING TO LATEST ABI
QUICK POLL
October 12, 2010, Alexandria, Va. —
Fifty-three of respondents to ABI’s latest Quick Poll thought that
a dissenting class of secured creditors should not be stripped of rights
to credit-bid its claims under a reorganization plan that proposes an
auction sale of the creditors’ collateral free and clear of liens.
Thirty-seven percent “strongly disagreed” and 16 percent
“disagreed somewhat” that dissenting secured creditors could
be stripped of rights to credit-bid their claims under a reorganization
plan that proposes an auction sale of creditor’s collateral free
and clear of liens.
Credit bidding is a process that allows a secured creditor to bid the
full face value of their claim against a debtor, including the unsecured
deficiency portion, rather than putting up cash or other currency at a
sale of the debtor’s assets. Earlier this year in the case of In
re Philadelphia Newspapers, the U.S. Circuit Court of Appeals for the
Third Circuit affirmed a bankruptcy court ruling that Section 1129
(b)(2)(a) did not require that the lenders have the right to credit bid
their claims in a reorganization plan- approved sale.
Thirty-eight percent of respondents, however, agreed that a
dissenting class of secured creditors can be stripped of any right to
credit bid their claims under a plan that proposes an auction sale of
the creditors’ collateral free and clear of liens. Twenty percent
“agreed somewhat” and 18 percent “strongly
agreed” on the issue. Six 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: “A dissenting class of secured
creditors can be stripped of any right to credit-bid its claims under a
plan that proposes an auction sale of the creditors’ collateral
free and clear of liens. In re Philadelphia Newspapers, 599 F.3d
298.”
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.