Credit bidding. It’s a perpetual issue, especially in the Third Circuit, and in the commercial real estate loan context, generally. Last year, we reported on In re Fisker Automotive Holdings, Inc., a case that "sent shock waves through the distressed debt market," said Holman. Fisker seemed to limit the right of a secured creditor to credit bid, a tool secured parties used to protect their interests in the value of their collateral. But not much has actually changed. "Since the decision, we've all sort of calmed down," Holman said. The specific facts in Fisker may have limited its reach.

The American Bankruptcy Institute’s Commission to Study the Reform of Chapter 11, which we will discuss more on page 13, looked at whether credit bidding should even be advisable in chapter 11 cases, since those credit bids could chill the auction process. But the potential chill to other bids isn't reason enough for courts to prevent it, the commission decided.

Our panel agreed. In RadLAX Gateway Hotel, LLC v. Amalgamated Bank, the U.S. Supreme Court reinforced the idea that a secured creditor cannot be denied this protection. "If the mere fact that a well-secured creditor can credit bid up to the amount of its debt chills the bidding, so be it," explained Holman. "It shouldn’t be something that the court can in any way reduce for that reason alone."