There is some interesting commentary from hotel and leisure advisors and lawyers on the subject matter of a major case on credit bidding by banks and lenders that will be going before the Supreme Court. At issue is whether during a bankruptcy auction a lender can purchase collateral using its own debt. According to David Neff in HotelNewsNow.com, an attorney at Perkins Coie who will represent the debtor before the Supreme Court: – “This case is important to the hotel industry because it seeks a determination that lenders can be prevented from bidding with just their debt at a bankruptcy auction of the hotel that secures their debt and seeks to force them to have to bid with cash just like any other bidder.” Read more what these hotel and leisure advisors and the opposing counsel for the lender had to say. Note: During a hotel bankruptcy, a “Credit Bid” is the amount a lender can bid at a foreclosure sale under one of its mortgages, representing the total of all amounts due under the promissory note (The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.). Are you a lawyer for the debtor or creditor or a hotel real estate advisor involved in a potential bankruptcy and auction of a distressed hotel asset? What can you share as hotel and leisure advisors on the issue of whether banks and lenders should be permitted to use a credit bid during an auction.
