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The Paul, Weiss Bankruptcy & Corporate Reorganization Department serves as a critical advisor in almost every major, complex restructuring matter, helping companies, creditors and investors facing rapid market transformation respond to business challenges with comprehensive and innovative strategies. Diversity of matters and clients, senior-level attention and seamless delivery of multidisciplinary services distinguish the practice.

Recent Decisions Impacting Chapter 11 Sales: Limitations on Secured Creditor’s Right to Credit Bid and Non-Bidder’s Right to Challenge Confirmation of a Sale

February 7, 2014 download PDF

Recent decisions by the Bankruptcy Court for the District of Delaware and the United States Court of Appeals for the Seventh Circuit address two significant issues relating to chapter 11 asset sales:  whether a secured creditor's right to credit bid purchased debt may be capped at the discounted price paid for such debt to facilitate an auction, In re Fisker Automotive Holdings, Inc., 2014 WL 210593 (Bankr. D. Del. Jan. 17, 2014) ("Fisker") and whether an entity that fails to qualify for an auction has standing to oppose confirmation of a sale to the winning bidder, In re New Energy Corporation, 2014 WL 145274 (7th Cir. Jan. 15, 2014) ("New Energy").  Both decisions highlight potential risks parties may face if they purchase secured debt as part of a larger acquisition strategy or do not bid or play by the rules of an auction.

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