"Credit Bidding in the Wake of Fisker Automotive"

On January 17, 2014, in the chapter 11 case of In re Fisker Automotive Holdings Inc., Case No. 13-13087, the United States Bankruptcy Court for the District of Delaware held that "cause" existed under section 363(k) of the Bankruptcy Code to limit a secured creditor's right to credit bid at the sale of its collateral to the amount equal to what the lender paid to purchase the debt in the secondary market.  This Stroock Special Bulletin analyzes the bankruptcy court's decision, which was predicated upon a number of case-specific factual issues.  However, the court's broadly-stated rationale may have implications for other cases going forward.