On Dec. 12, 2011 the U.S. Supreme Court granted certiorari in River Road Hotel Partners, LLC, et. al. v. Amalgamated Bank (In re River Road Hotel Partners, LLC), 651 F.3d 642 (7th Cir. 2011). The Court will settle a split among the circuits as to whether, under §1129 of the U.S. Bankruptcy Code, a nonconsensual plan of reorganization (the plan) must give dissenting secured creditors an opportunity to credit bid1 when the plan provides for the sale of the secured creditors’ collateral. Some have speculated that, if the Supreme Court overrules River Road, secured credit will become more expensive as loan markets price in a contraction in secured creditors’ rights in restructuring.2 Perhaps not. As follows, while an overruling of River Road may allow for sale of collateral without credit bidding under a plan, secured creditors may, with some complications, still have the benefit of credit bidding.3

Protection of Secured Creditors

The Supreme Court has determined that secured creditors’ rights in collateral include traditional state law remedies and are “property” subject to constitutional protection. Accordingly, while the Code may delay enforcement and limit repayment to the value of the interest in collateral as well as channel the form of repayment, outright stripping of secured creditors’ rights has generally been struck down. See Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555 (1935); Wright v. Vinton Branch of the Mountain Trust Bank of Roanoke, 300 U.S. 440 (1937); Wright v. Union Central Life Ins. Co., 311 U.S. 273 (1940); United Savings Ass’n of Texas v. Timbers of Inwood Forest Associates, Ltd., 484 U.S. 365 (1988).4

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