• Can PE Firms Use Chapter 11 to Credit Bid Away Landlords and Unsecured Debt?
  • November 11, 2011 | Authors: Robert E. Copps; B. Knox Dobbins; Michael Gurion; Edward W. Kallal; Jason D. Stone; Wade H. Stribling; Michael J. Voynich
  • Law Firms: Sutherland Asbill & Brennan LLP - New York Office ; Sutherland Asbill & Brennan LLP - Atlanta Office
  • It will be almost Christmas before we know, at least for portfolio companies that can file in the Delaware Bankruptcy Court. The case that will provide guidance is Friendly Ice Cream Corp., where Sun Capital, which is both equity owner and term lender, put Friendly into Chapter 11 on October 5, 2011. It did so after agreeing to a Section 363 purchase agreement with Friendly that would allow a Sun affiliate to buy assets (including desirable lease locations) free and clear by credit bidding outstanding pre-petition term debt owed to Sun.