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Bankruptcy Court Allows Collateral Agent to Credit Bid Without 100% Approval of Senior Lenders in Same Facility
April 28, 2009
In a recent decision, the Bankruptcy Court for the District of Delaware allowed the collateral agent for senior lenders to credit bid for the debtors’ assets even though all of the senior lenders had not authorized the bid. One of the senior lenders had objected to the group’s acquisition of the debtors’ assets by the credit bid. In re GWLS Holdings, Inc., 2009 WL 453110 (Bankr. D. Del. Feb. 23, 2009) (Walsh, J.). Relying exclusively on the underlying loan documents, the bankruptcy court held that collateral agent “had the authority to enter the credit bid in accordance with § 363(k) of the Bankruptcy Code on behalf of all the First Lien Lenders as contemplated by the clear and unambiguous language of . . . the Collateral Agreement.” Id. at *6.
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