pdf

O’Melveny’s Rapisardi, Zujkowski Author NYLJ Article on Credit Bidding Rights

May 16, 2014 O’Melveny & Myers partner John Rapisardi and counsel Joseph Zujkowski co-authored a May 8, 2014, New York Law Journal article, titled “Credit Bidding Rights Again Limited ‘for Cause.’”  The article focuses on recent decisions finding that “cause” existed to limit the right of a secured creditor to credit bid its claims in connection with an asset sale under chapter 11 of the Bankruptcy Code.  According to the authors, these decisions “raise red flags for investors considering purchasing secured debt with the hope and expectation of acquiring some or substantially all of a debtor’s assets.”

Such investors should seek counsel to help them avoid actions that may trigger a limitation of credit bidding rights, the authors recommend, further suggesting that investors “be prepared to challenge any amorphous notion that the acquisition of secured debt at depressed prices is a sufficient basis for limiting or capping a credit bid ‘for cause’ in order to further other goals or objectives reflected in the Bankruptcy Code.”

Rapisardi is co-chair of O'Melveny's Global Restructuring Practice, of which Zujkowski also is a member.  They reside in the Firm’s New York office.