Video Commentary: US Supreme Court to Hear RadLAX Bankruptcy Case This Week
April 23, 2012
Madlyn Gleich Primoff, a Partner in Kaye Scholer’s Bankruptcy & Restructuring Practice, shares her perspective on the US Supreme Court RadLax case (RadLAX Gateway Hotel, LLC and RadLAX Gateway Deck, LLC v. Amalgamated Bank).
Depending on the outcome, the case will either be used to preserve and confirm the rights of secured lenders in bankruptcy sales – or to undermine the secured lenders’ position. This case tests the well-established principle in bankruptcy cases that lenders are either entitled to be repaid or to take their collateral.
When the debtor in RadLAX filed for bankruptcy, $120 million was owed to the secured lender. The debtor in this case attempted to sell their assets to a bidder for $47.5 million, blocking the lender’s credit bid. The Court of Appeals for the Seventh Circuit ruled in favor of the lender. However, the Third and Fifth Circuits ruled to the contrary in other cases.
The U.S. Supreme Court is now scheduled to rule on this case, which has far-reaching importance for all parties in bankruptcy cases involving a sale under a plan of reorganization. The video can be viewed here.