The U.S. Supreme Court granted a petition for certiorari in RadLAX Gateway Hotel, LLC et al. v. Amalgamated Bank on Dec. 12, 2011. The question presented is, whether a debtor may pursue a Chapter 11 plan that proposes to sell assets free and clear of liens without allowing the secured creditor to credit bid up to the full amount of its claim, but instead, providing the secured lender with the indubitable equivalent of its claim.
The jointly administered debtors proposed plans to sell substantially all of their assets. Pursuant to the plans, the secured creditors would receive the “indubitable equivalent” of their claims and would not be permitted to credit bid at the sale. In connection with the proposed plans and sale, the debtors filed their motion to establish bidding procedures which specified that no credit bids were allowed. The secured lenders objected to the bidding procedures motion and argued that the sale could only be approved if credit bidding was allowed and since credit bids were prohibited, the plans were unable to be confirmed.