Another Case To Further Fisker’s Credit-Bid Uncertainty

In the article, ​“Another Case To Further Fisker’s Credit-Bid Uncertainty,” published by Law360 in its Expert Analysis section, special counsel Ben Feder discusses the chapter 11 cases of Fisker Automotive and Free Lance-Star Publishing Co. The article focuses on recent rulings in these cases; in both instances the courts narrowed a secured creditor’s right to credit-bid its debt in connection with a sale of the debtor’s assets. The decisions have surprised many observers and ​“put the issue of credit bidding back on the table, particularly in so-called ​‘loan to own’ situations where secured debt is purchased at a substantial discount for the purpose of effecting the acquisition of a distressed borrower.” The right of secured lenders to credit-bid the full amount of their debt was considered settled following the Supreme Court’s May 2012 decision in RadLax Gateway Hotel. Ben’s article considers the broad implications of these rulings, including their potential significant impact on the secondary trading market for distressed debt, as well as the likelihood that another credit-bidding case will make its way to the Supreme Court.