On May 29, 2012, the U.S. Supreme Court in RadLAX Gateway Hotel v. Amalgamated Bank,1 its first significant Chapter 11 opinion in several years, affirmed the U.S. Court of Appeals for the Seventh Circuit’s decision in River Road Hotel Partners v. Amalgamated Bank,2 prohibiting a debtor from selling assets free and clear of liens under a plan of reorganization without permitting a secured creditor to credit bid. RadLAX resolves a circuit split and reverses prior rulings of the U.S. Court of Appeals for the Third and Fifth circuits endorsing proposed plan sales that did not provide secured creditors with the right to credit bid.
Last July, this column urged the court to affirm the Seventh Circuit if given the opportunity, and restore secured creditors’ right to credit bid. Writing for a unanimous 8-0 court, Justice Antonin Scalia did just that. In a relatively short opinion, relying almost exclusively on a textual analysis of Bankruptcy Code §1129(b)(2)(A), Scalia characterized the decision as “an easy case” and affirmed.
