• Third Circuit Rules Secured Creditors Do Not Have a Right as a Matter of Law to Credit Bid in Bankruptcy Plan Sale
  • April 13, 2010
  • Law Firm: Winston & Strawn LLP - Chicago Office
  • This week, in a 2-1 decision affirming the District Court’s reversal of a ruling of the Bankruptcy Court for the Eastern District of Pennsylvania, the United States Court of Appeals for the Third Circuit held that secured creditors do not have a right as a matter of law to credit bid their claim at an auction pursuant to a plan of reorganization where the debtor intends to impose the plan on its secured creditors through a “cramdown” under section 1129(b)(2)(A)(iii) of the Bankruptcy Code; i.e., a plan providing the secured creditors with the “indubitable equivalent” of their secured claim. In re Philadelphia Newspapers, LLC, 2010 WL 1006647 (3d Cir. March 22, 2010). Circuit Judge Ambro, who was a bankruptcy attorney prior to joining the bench, issued a lengthy dissent.