"Seventh Circuit Court of Appeals Affirms Secured Creditor’s Right to Credit Bid in a Plan Sale"

Until recently, it was commonly presumed that a secured creditor had a right to credit bid its debt in connection with a sale of a debtor's assets pursuant to a plan of reorganization.  Then came the Fifth Circuit's opinion in Pacific Lumber, and the Third Circuit's opinion in Philadelphia Newspapers, both of which held that no such right to credit bid exists.  This Stroock Special Bulletin looks at the June 28, 2011 decision by the Seventh Circuit Court of Appeals in River Road Partners, LLC v. Amalgamated Bank (In re River Road Partners, LLC), in which the Seventh Circuit held that a debtor seeking to confirm a plan of reorganization by selling its assets, over the objection of a secured creditor with a lien on such assets, must provide the secured creditor the right to credit bid.