Recently, the 3rd Circuit Court of Appeals limited a secured creditor's ability to credit bid in a sale proceeding. This decision marks a significant change from prior practice in the Bankruptcy Court. At this point in time, the implications of this holding are far reaching and could be construed as limiting credit bidding by secured lenders in a variety of scenarios. Accordingly, it may be worth considering the steps that can be taken to minimize the limitation of credit bidding by secured lenders.
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