[4/24 Update: Part II here]
Chicago bankruptcy professionals descended on the US Supreme Court to catch the final chapter in the RadLAX bankruptcy saga, one that had a remarkably swift journey to the highest court of the land. The case started as the neglected stepchild of Amalgamated Bank, the trustee of the deeply undersecured Longview Ultra I Construction Loan Investment Fund (having about $100 million of collateral to support a $300 million original investment).
Following Chief Judge Black’s rejection of RadLAX’s sister debtor’s (River Road) attempt to jam Amalgamated with a plan that sold the hotel while denying the Bank its proclaimed right to credit bid its claim at auction, Amalgamated proposed its own plan (which was confirmed last July with the Bank effectively "buying" the Debtor’s assets through credit bid, thus mooting out any appeal of Chief Judge Black’s denial of River Road’s original cram down plan). For whatever reason, however, the Bank in the RadLAX sister case had no interest in confirming its own credit bid plan, thereby leaving the RadLAX debtor to its own devices, which ultimately meant a trip to the Seventh Circuit. The Seventh Circuit sided with Amalgamated, and the Supreme Court agreed to hear the appeal in order to resolve a split in the federal appellate courts as to whether a debtor can ever propose a cram down plan that offers the lender’s collateral for sale at auction without concurrently giving the lender the right to credit bid in its claims at the auction.
Unlike the lender, which had the support in amicus briefs of some of the most notable bankruptcy professors and scholars to grace a classroom (Lieb, Klee, Baird, Sharfman, Kuney, to name a few), the RadLAX debtor had no official support today–other than the down and out debtor hunched on the sidewalk in front of the Supreme Court succinctly imploring the Justices to "Stop Predatory Credit Bidding Now"!
The oral argument, which started at 10:02 am sharp and lasted 59 minutes, had more Chicago bankruptcy professionals in the room than were probably in Chicago bankruptcy court today (given the dearth of active commercial cases these days). These included:
- Chicago’s Chief Bankruptcy Judge Bruce Black (who, as noted above, started the ball rolling);
- Perkins Coie’s David Neff (argued) and Brian Audette (second chair) (pictured right), along with partners Dan Zazove and Deborah Gutfeld (representing the Debtor);
- Katten’s John Sieger (representing US Bank);
- US DOJ’s newly minted appellate practice lawyer (and former DOJ counsel to the US Trustee in Chicago) Cameron Gulden;
- Jones Day’s Brad Erens; and
Other bankruptcy professionals in attendance included Craig Goldblatt, Prof. Eric Brunstad, fellow bloggers Peter Friedman and Doug Mintz of Cadwalader, Gary Holzer, and of course, Adam Lewis and Norm Rosenbaum for Amalgamated, and many others.
Part II of this post will focus on what’s bothering the Justices (there’s always something bothering them!) as gleaned from the key points around which the Justices’ questions continually revolved.
Meanwhile, don’t forget to sign up for tomorrow’s first webinar (April 24) to discuss today’s arguments at the Court, sponsored by Wilmer Hale and LSTA, and featuring LSTA’s Elliot Ganz and WilmerHale Partners Craig Goldblatt and Danielle Spinelli (all of whom were on an amicus brief filed with the Court for a number of leading financial industry trade associations). Here is the link to the webinar.
Thanks for reading!
[4/24 Update: Part II here]