River Road Decision Vindicates Philadelphia Newspapers Dissent

The article discusses the Third Circuit Court of Appeals Philadelphia Newspapers Chapter 11 case. The court interpreted the ​“cramdown” provisions of the U.S. Bankruptcy Code as permitting an auction of the lenders’ collateral to take place pursuant to a plan of reorganization while denying the lenders the right to credit bid their debt. The article then reviews the Seventh Circuit’s unanimous opinion on credit bidding in the River Road Hotel Partners case. This decision, similar to Judge Tom Ambro’s dissent in the Philadelphia Newspapers case found the Third Circuit majority’s result clashed with the Bankruptcy Code’s express protection of non-bankruptcy rights. The article explains how the Philadelphia Newspaper case denies the lenders the right to credit bid their debt, which fails to protect the right of a secured creditor to look to its collateral in the event of non-payment.