The US Supreme Court’s decision in Radlax Gateway Hotel v. Amalgamated Bank was welcomed for its guidance on an unclear section of the US bankruptcy code. It leaves the door open for debtors to cram down a reorganisation plan at the angst of secured creditors though.
In the nearly unanimous decision (Justice Anthony Kennedy was not present) the court recognised the right of secured creditors to use a debtor’s outstanding balance to bid on assets free of liens during a chapter 11 section 363 sale. Justice Antonin Scalia’s opinion was a relief for all of the investment associations that submitted amicus briefs to the court.