The Third Circuit has ruled in Philadelphia Newspapers that a cramdown plan that includes an asset sale not subject to credit bidding is confirmable. The ruling overs only sales under a plan (1123(a)(5)(D) sales), not pre-plan sales (363 sales). It is the latest example (with Chrysler and GM’s plans being the next most recent) of the tension between sections 363 and 1123/1129. In Chrysler and GM, a 363 sale was used to effectuate a plan, whereas in Philadelphia Newspapers, an 1123/1129 sale is being used to effectuate a 363 sale without credit bidding. It’s becoming increasingly clear that integrating 363 and 1129 protections for creditors is going to be at the heart of the next round of corporate bankruptcy reform.
Some thoughts below. I suspect that Stephen Lubben will chime in as well…