Circuits Split Over Credit Bidding in Sales Under Chapter 11 Plans

In a recent decision, River Road Hotel Partners, LLC v. Amalgamated Bank, No. 10-3597 (7th Cir. Jun. 28, 2011), the United States Court of Appeals for the Seventh Circuit declined to follow Philadelphia Newspapers. Instead, the Seventh Circuit upheld a secured lender’s right to credit bid at an auction for a debtor’s assets conducted as part of a chapter 11 plan.