In the April 2010 ABF Journal article, “In re Philadelphia Newspapers, LLC: The Not-So-Secured Right to Credit Bid,” Jeffrey Wurst discussed the Third Circuit’s decision that in a sale of assets under a plan of reorganization, a secured lender did not have the right to credit bid. Since then, the Seventh Circuit allowed the secured creditor to credit bid. The resulting U.S. Supreme Court decision in RadLAX held that a sale of assets under a plan cannot prevent a secured creditor from credit bidding.
What’s all this about Stern v. Marshall? Commentators and courts have scrambled to take the Supreme Court at its word, and attempt to limit the impact of the Stern decision. Whether these decisions will stand up under future Supreme Court review, if and when it occurs, is not so clear. Early decisions seem favorable, but it is likely that litigants emboldened by Stern—including those adverse to secured creditors—may probe the limits of bankruptcy court authority.
Two recent Supreme Court decisions — Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal — have threatened to dramatically change the framework under which federal complaints are analyzed for sufficiency. These decisions will place a substantial burden on plaintiffs in federal suits.