Unsecured Trade Creditors Committee

ABI Committee News

The Circuits Split on Lenders' Credit-Bid Rights in Chapter 11 Plan Sales, but What Does That Have to Do with Unsecured Creditors?

Last year, a divided panel of the Third Circuit Court of Appeals held that the plain language of § 1129(b)(2)(A) of the Bankruptcy Code allows a debtor to propose the sale of a secured creditor’s collateral free and clear of liens without providing a right to credit-bid, so long as the creditor receives the indubitable equivalent of its claim.[1] This summer, a unanimous panel of the Seventh Circuit decided just the opposite; that a debtor cannot sell a secured creditor’s collateral free and clear of liens under a plan without affording them the right to credit-bid.[2] The decisions have obvious and immediate importance for secured creditors, particularly in the loan-to-own context. However, a topic that has been less widely discussed is how, if at all, the decisions may affect unsecured creditors.

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Stern v. Marshall: The Aftermath

Ryan C. Cicoski

Although several months have now passed since the Supreme Court first decided Stern v. Marshall, parties to bankruptcy cases nationwide are still absorbing the impact of the decision on the authority of bankruptcy courts to determine certain disputes in bankruptcy cases and to render final judgments.[1] Much of the current confusion can be attributed to the wide gulf separating Stern’s majority and dissenting opinions, but the Supreme Court’s prior forays into this area also deserve some of the blame. As an exasperated Justice Scalia noted in his concurring opinion, “[t]he sheer surfeit of factors that the Court was required to consider in this case should arouse the suspicion that something is seriously amiss with our jurisprudence in this area.”[2] From the Stern majority’s perspective, its decision couldn’t have been clearer. But as everyone knows, even narrow holdings can have unintended consequences.

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ABI Launches Its New Search Engine - search.abi.org


Recent Educational Resources Can Now be Found on materials.abi.org


New Publication in the ABI Bookstore - Trade Creditor Remedies Manual: Trade Creditors' Rights


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