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On October 5, 2010, Judge Bruce Black of the United States Bankruptcy Court for the Northern District of Illinois (the “Bankruptcy Court”) issued a ruling in the River Road Hotel Partner LLC, et. al. (the “Debtors”) bankruptcy cases denying the Debtors’ bid procedures motion incident to plan confirmation. The bid procedures motion, among other things, sought the denial of secured creditor’s right to credit bid. Judge Black ultimately ruled that the Debtors may not use section 1129(b)(2)(A)(iii) to deny secured creditor’s right to credit bid, and the Debtors failed to show sufficient cause to deny credit bidding under sections 1129(b)(2)(A)(ii) and 363(k).

Prior to filing their bid procedures motion, the Debtors, owners of the InterContinental Hotel Chicago O’Hare¹, negotiated the primary economic terms of an asset purchase agreement to sell substantially all of their assets to O’Hare River & Technology Hotel LLC (the “Stalking Horse Purchaser”) for $42 million in cash. The asset purchase agreement was filed contemporaneously with the bid procedures motion. The Debtors stated in their bid procedures motion that the Stalking Horse Purchaser’s bid would be subject to a continued marketing effort and higher or better offers. The Debtors intended to execute the sale of substantially all of their assets in connection with a Chapter 11 plan (the “Plan Sale”) free and clear of liens, pursuant to sections 1123 and 1129 of the Bankruptcy Code, specifically, section 1129 (b)(2)(A)(iii) or in the alternative 1129(b)(2)(A)(ii) and 363(k).

The Debtors’ proposed bid procedures stated that “no holder of a lien on any assets of the Debtors shall be permitted to credit bid pursuant to section 363(k) of the Bankruptcy Code.”

The Bankruptcy Code provides two methods by which a debtor may sell substantially all of its assets. The first is a sale conducted pursuant to Bankruptcy Code section 363 and the second is pursuant to a plan under Bankruptcy Code section 1123(b).

To read the full alert, click on Link to article below. For additional information, please contact:

Lenard Parkins 212.659.4966 [email protected] Sue Murphy 214.651.5602 [email protected] Sarah Foster 512.867.8412 [email protected]

David Liebenstein 212.659.4970 [email protected] Kenric Kattner 713.547.2518 [email protected]

Matthew Russell 212.918.8983 [email protected] Stephen Pezanosky 817.347.6601 [email protected] Eric Terry 210.978.7424 [email protected]

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¹ The hotel is located minutes from O’Hare International Airport and 14 miles west of downtown Chicago. The hotel has 556 guest rooms. In addition, there is an approximately 48,600 square-foot addition to the Hotel consisting of meeting space.

 

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