- Court: U.S. Supreme Court Certiorari Granted
- Area(s) of Law: Bankruptcy Law
- Date Filed: December 12, 2011
- Case #: 11-166
- Judge(s)/Court Below: 651 F.3d 642 (7th Cir. 2011)
- Full Text Opinion
Petitioner debtors appeal from a U.S Bankruptcy Court order denying their bid procedure motions submitted in connection with their Chapter 11 reorganization plans. Under both plans, Petitioners sought to auction off their assets to the highest bidder, with the initial bid in each auction to be supplied by a stalking horse bidder that had been lined up in the post-petition, pre-plan period. The Bankruptcy court denied Petitioner’s bid procedures on the grounds that they involved selling encumbered assets free and clear of liens without allowing their lenders the opportunity to bid their credit at the asset auctions, in violation of 11 U.S.C § 1129(b)(2)(A)(ii), which requires that secured lenders be given credit-bidding rights. Petitioners' appealed the denial of their motions arguing that their bid procedures should be confirmed under subsection (iii) of 11 U.S.C. § 1129(b)(2)(A), which, they argue, serves as an alternative method for allowing the Court to confirm a debtor’s reorganization plan. The Court of Appeals for the Seventh’s Circuit applied rules of statutory construction and explained that a plan providing for the sale of property free and clear of liens without affording the lender the right to credit bid is not “fair and equitable” under § 1129(b)(2)(A) of the Bankruptcy Code.