As auctions have become more prominent in Chapter 11 proceedings, credit bidding has bolstered the multi-decade trend of secured creditor dominance, which the Supreme Court sustained in 2012. Since this 2012 decision, bankruptcy courts have attempted to level the playing field by progressively expanding the interpretation of Section 363(k) of the Bankruptcy Code, which permits courts to limit secured creditors' ability to credit bid "for cause." The conflict between the Supreme Court's 2012 decision and the bankruptcy courts' recent interpretation of Section 363(k) created an uncertainty that currently plagues the market for secured claims of distressed companies. This Note reviews the current state of the law surrounding credit bidding, examines the most recent developments likely to impact its future, and provides interpretive recommendations for bankruptcy practitioners and the judiciary.
Credit Bidding: Expanding the “For Cause” Exception Under Section 363(k) of the Bankruptcy Code,
12 Hastings Bus. L.J. 241
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