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Nothing is more frustrating to a creditor collecting on a promissory note than having the defendant object to the authenticity and/or admissibility of the note—particularly, in response to a creditor’s summary-judgment motion. Generally, such objections contend that the note is inadmissible as the original copy of the note was not proffered by the creditor and/or the “keeper of the records” designated by the creditor is not a witness with sufficient knowledge to authenticate the note.
On June 28, 2011, the U.S. Court of Appeals for the Seventh Circuit affirmed the U.S. Bankruptcy Court of the Northern District of Illinois’ decision and held that a secured creditor has a statutory right to credit-bid its debt in the sale of assets proposed under a nonconsensual reorganization plan pursuant to § 1129(b)(2)(A) of the Bankruptcy Code. [1] The River Road case is significant for at least two reasons.
Picture the typical bankruptcy case. The decision is made to sell the assets, and debtor’s counsel drafts bidding procedures to create a framework to generate the highest and best bid for a particular estate asset. The committee and the secured creditors make comments and the court approves the bidding procedures. Potential purchasers review the bidding procedures and line up to make their bids. Auction day arrives, bidding begins and subsequently ends with the naming of the successful bidder. Next stop: court approval. But wait!
Asset sales of substantially all of the assets of a corporate debtor early in a chapter 11 case have become routine. Orders approving motions to approve streamlined procedures for sales of de minimis assets in large chapter 11 cases have also become routine. In re Borders Group, Inc. [1] addressed the tension that arises from the understandable desire of debtors to maximize efficiency and expediency in sales of de minimis assets free and clear of liens, claims and encumbrances against the competing desire of buyers for assurance that their purchases are not subject to later attack.
Picture the typical bankruptcy case. The decision is made to sell the assets, and debtor’s counsel drafts bidding procedures to create a framework to generate the highest and best bid for a particular estate asset. The committee and the secured creditors make comments and the court approves the bidding procedures. Potential purchasers review the bidding procedures and line up to make their bids. Auction day arrives, bidding begins and subsequently ends with the naming of the successful bidder. Next stop: court approval. But wait!
Editor’s Note:For more information about this case, please read two features by Jonathan S. Covin and David G. Gamble that were published in the July/August and October 2010 issues, respectively.
In In re Douglas Ray, [1] the Ninth Circuit recently held that a bankruptcy court lacks jurisdiction to reopen a closed case to preclude a collateral attack on its prior, final sale order.
