Credit Bidding Rights Stalled: in Re Fisker Automotive

Credit Bidding Rights Stalled: In re Fisker Automotive By George Klidonas* A secured creditor with a properly perfected lien on a debtor's property has certain rights against the debtor and the property in bankruptcy cases. One of those rights is the creditor's right to credit bid the amount of its allowed claim in any sale of its collateral. Thus, in a debtor's attempt to sell property in which a secured creditor holds a security interest, the secured creditor is allowed to bid the amount of its debt as a credit bid, as opposed to a cash bid. The right to credit bid exists both under state law, as well as section 363(k) of the Bankruptcy Code. The question that courts are faced with when interpreting section 363(k), however, is whether the right to credit bid is limitless. The Bankruptcy Court for the District of Delaware, in In re Fisker Auto- motive, held that a secured creditor's right to “credit bid” is not absolute and can be limited.1 This Article discusses the background of section 363(k), the In re Fisker Automotive case and the justication for the court's conclusion, as well as subsequent decisions that have interpreted In re Fisker. In addition, this Article compares the In re Fisker Automotive decision to RadLAX Gateway Hotel, LLC v. Amalgamated Bank and provides some insight to secured creditors (or holders of secured debt) moving forward. Specically, the decision in In re Fisker Automotive is seemingly at odds with the Supreme Court's decision in in RadLAX Gateway Hotel, LLC v. Amalgam- ated Bank, which held that a secured creditor has an absolute right to credit bid under a plan of reorganization.2 I. What is Section 363(k)? Section 363(b) of the Bankruptcy Code allows a debtor, with court authority, to sell property of the estate outside of the ordinary course of business.3 Such sales have become increasingly common in recent years and more and more chapter 11 lings have taken place with this purpose in mind.4 In the event, however, the debtor attempts to sell property that is encumbered by a secured creditor's security interest, section 363(k) of the Bankruptcy Code allows that secured creditor to “credit bid” up to the amount of its claim. The following example is illustrative: Creditor Bank is owed $1 million by Debtor XYZ, secured by a valid and perfected lien on the debtor's property worth $500,000. Once Debtor XYZ les for bankruptcy, it decides to

* The views expressed herein are solely those of the authors. George Klidonas is an as- sociate at BakerHostetler in New York, with a primary focus on bankruptcy, corporate restructuring, and creditors' rights. He is also the Coordinating Editor for the ABI Journal Practice and Procedure Column, and co-chair of the ABI Taxation Committee.

174 © 2015 Thomson Reuters, Norton Journal of Bankruptcy Law and Practice, Vol. 24 No. 2 Credit Bidding Rights Stalled: In re Fisker Automotive sell the property under section 363(b) by undertaking an auction process. Creditor Bank generally has the ability to credit bid up to the full $1 million face value of its claim without the need to provide for additional cash or other consideration. It is irrelevant that the value of the property is $500,000. Credit bidding allows secured creditors to purchase the property compris- ing its collateral if cash bidders prefer not to pay sucient value or the secured creditor prefers to possess the collateral in lieu of payment. The downside to credit bidding from the debtor's perspective is that it “chills” the auction process, meaning cash bidders are reluctant to compete with secured creditors' bids because a secured creditor, to be the winning bidder, does not have to oer any cash, except for the amount of liens that are senior to the secured creditor's lien. A prime example of how credit bidding could chill the auction process is by reviewing the above example. If Property Buyer in Debtor XYZ's bankruptcy oered to pay the value of the property, it would have to bid $500,000, while Creditor Bank would not need to provide any cash because it would bid its credit up to$1 million and, thus, be successful. Thus, Property Buyer would have to bid something over $500,000 on property worth $500,000 in order to outbid Creditor Bank's credit bid. Nonetheless, credit bidding has traditionally been viewed as an inherent right of secured creditors under state law, but bankruptcy law has set limitations. Section 363(k) provides: “At a sale under subsection (b) of this section of property that is subject to a lien that secures an allowed claim, unless the court for cause orders otherwise the holder of such claim may bid at such sale, and, if the holder of such claim purchases such property, such holder may oset such claim against the purchase price of such property.”5 Al- though section 363(k) allows a secured creditor to credit bid, it also eliminates that right if the court nds that “cause” exists.6 “The term cause is not dened in the Bankruptcy Code and is left to the courts to determine on a case-by-case basis.”7 Nonetheless, certain general propositions can be made about when “cause” exists. For example, courts have found that cause exists as a punitive measure. In In re Theroux, the Bankruptcy Court for the District of Rhode Island held that evidence of collusion was enough to prevent a secured creditor from credit bidding.8 On a lower scale of misconduct, courts have restricted a creditor's ability to credit bid where the creditor failed to comply with court orders or procedures.9 Courts have also limited credit bidding to preserve the value of the estate.10 Similar to this last point, the bankruptcy court in In re Fisker Automotive shed light on what constitutes “cause” under section 363(k) of the Bankruptcy Code,11 where the bankruptcy court concluded that the secured creditor did not have an absolute right to credit bid and that, generally, a court may deny a lender the right to credit bid in the interest of any policy advanced by the Bankruptcy Code.12 II. In re Fisker Limits Secured Creditors' Right to Credit Bid A. Factual and Procedural Background Fisker Automotive Holdings, Inc. and Fisker Automotive, Inc. (collec-

© 2015 Thomson Reuters, Norton Journal of Bankruptcy Law and Practice, Vol. 24 No. 2 175 Norton Journal of Bankruptcy Law and Practice tively, the “Debtors” or “Fisker”) were founded in 2007 by Henrik Fisker and Bernhard Koehler, and designed, assembled, and manufactured premium plug-in hybrid electric vehicles in the United States. Fisker, however, faced many challenges. It encountered safety recalls in connection with battery packs supplied by a third-party vendor. In addition, Hurricane Sandy af- fected Fisker by causing a material loss of its unsold vehicle inventory. Moreover, and most importantly, Fisker lost its lending facility provided through the United States Department of Energy.13 As a result of these challenges, the Debtors led for chapter 11 bankruptcy relief in order to sell substantially all of its assets under section 363(b) of the Bankruptcy Code. At the time of its petition ling, November 22, 2013, Fisker had approximately $203.2 million in debt, $168.5 million of which was owed to the Department of Energy. Hybrid Tech Holdings, LLC (“Hybrid”) pur- chased the Department of Energy's debt position $25 million (approximately fteen cents on the dollar). As a result, Hybrid succeeded to the Department of Energy's position as the senior secured lender. Fisker and Hybrid discussed the latter's potential acquisition of the former's assets through a credit bid. The Debtors agreed that Hybrid could credit bid up to $75 million.14 The Ocial Committee of Unsecured Creditors (the “Committee”) was appointed on December 5, 2013. The Committee opposed Fisker's motion to sell its assets to Hybrid. The Debtors' position was that a sale to a third party was not reasonably likely to generate greater value than Debtors' proposed sale transaction. In addition, the cost and delay of nding another potential buyer would be reasonably unlikely to increase value for the estates. The Committee, on the other hand, proposed that an auction take place, espe- cially in light of another potential purchaser's interest in Fisker's assets, Wanxiang America Corporation (“Wanxiang”). Wanxiang made it clear that it was willing to increase its bid if there was an auction.15 B. Court Holds that Hybrid's Ability to Credit Bid Was Limited The bankruptcy court found that Hybrid paid $25 million for its claim and was, therefore, entitled to credit bid under section 363(k) of the Bankruptcy Code. The question, however, was to what extent Hybrid would be allowed to credit bid. The court cited to the Third Circuit decision in In re Philadel- phia Newspapers, LLC, explaining that the right to credit bid under section 363(k) “is not absolute.”16 Although secured creditors have historically argued that the “for cause” exception is reserved for those situations where a secured creditor has engaged in inequitable conduct, the Third Circuit, as well as the In re Fisker court, rejected that position.17 Instead, “[a] court may deny a lender the right to credit bid in the interest of any policy advanced by the [Bankruptcy] Code, such as to ensure the success of the reorganization or to foster a competitive bidding environment.”18 In this case, the bankruptcy court concluded that there was “cause” to limit Hybrid's ability to credit bid, stating: “bidding will not only be chilled without the cap; bidding will be frozen.”19 Wanxiang had expressed interest

176 © 2015 Thomson Reuters, Norton Journal of Bankruptcy Law and Practice, Vol. 24 No. 2 Credit Bidding Rights Stalled: In re Fisker Automotive in participating in Fisker's auction. Moreover, the court found that it was a “highly attractive and capable participant.”20 Specically, Wanxiang indicated that it had a “vested interest” in purchasing Fisker, primarily due to its recent $300 million purchase of certain assets of A123 Systems, which included its lithium ion battery. The court also raised concerns about the timing of the sale motion, and the amount of Hybrid's allowed secured claim. First, the court concluded that Hybrid's “rush” to eectuate the purchase of Fisker's assets is incongruent with the notions of fairness in the bankruptcy process. Between the time the bankruptcy case began, and the anticipated sale motion, there were only 24 business days for parties to challenge the sale, during which there were a number of holidays. There was no satisfactory reason provided to the court for this degree of speed. Second, the court concluded that it was unclear how much of Hybrid's claim was actually secured. The holder of a lien may not bid on its lien if its validity has not been yet determined.21 Because the extent to which Hybrid's claim was valid has not yet been determined, no one knew how much of its claim would be an allowed secured claim. The court concluded that Hybrid was nonetheless allowed to credit bid up to $25 million, stating: “[a] decision to authorize an uncapped credit bid under the facts of this case would be unprecedented and unacceptable.”22 III. In re Fisker Has Been Followed by Other Courts Although it bears noting that the bankruptcy court's decision in In re Fisker was not precedential,23 courts have since cited to the decision in holding that a secured creditor's right to credit bid can be limited even though the creditor has not engaged in inequitable conduct.24 Most notably, the Bank- ruptcy Court for the District of Virginia limited a secured creditor's right to credit bit in the In re The Free Lance-Star Publishing Co. of Fredericksburg, VA case while partially relying on the In re Fisker decision.25 A. Factual and Procedural Background of The Free Lance-Star Publishing The Free Lance-Star Publishing Company of Fredericksburg, VA (“Free Lance-Star”) was a family-owned publishing, newspaper, radio and com- munications company located in Fredericksburg, Virginia. Free Lance-Star owned the Tower Assets, which included three parcels of land, used primarily for the debtor's radio broadcasting operations.26 After deciding to undertake an expansion of its commercial printing business, Free Lance-Star borrowed $50.8 million from Branch Banking and Trust (“BB&T”).27 Al- though BB&T was granted liens on certain real and personal property, it was not granted any liens on or security interests in the Tower Assets. With the loan proceeds, Free Lance-Star began building a state-of-the-art printing facility but eventually failed to comply with certain loan covenants. Although the company attempted to make timely payments, it was eventually unable to obtain replacement nancing. BB&T eventually sold its loan to Sandton Capital Partners, which informed the debtor that it should le for chapter 11 and sell all of its assets.28 Counsel for DSP Acquisitions, LLC, an

© 2015 Thomson Reuters, Norton Journal of Bankruptcy Law and Practice, Vol. 24 No. 2 177 Norton Journal of Bankruptcy Law and Practice entity that is aliated with Sandton and was the ultimate holder of the notes, provided Free Lance-Star with a restructuring timetable in order to timely record executed deeds of trust in connection with the Tower Assets.29 The months leading up to the ling of the bankruptcy petition were sour between Free Lance-Star and DSP Acquisitions. First, DSP unilaterally led UCC Fixture Financing Statements months before the ling of the bankruptcy petition without informing Free Lance-Star. Then, when Free Lance- Star's attempted to market the company's assets, DSP challenged the projec- tions as being too optimistic. Moreover, DSP insisted that any marketing materials include a statement on the front page, in bold font, that DSP had a right to credit bid up to $39 million.30 Finally, Free Lance-Star refused DSP's oer to provide post-petition loan facility or debtor-in-possession loan. On January 23, 2014, Free Lance-Star and William Douglas Properties, LLC led for chapter 11 protection. On the same day, they led a motion seeking to approval of bidding procedures for an auction to sell substantially all of their assets.31 DSP led a complaint seeking a declaration from the court that it had valid and perfect liens on substantially all of the debtors' assets.32 After a hearing, the bankruptcy court concluded that DSP (i) did not hold valid, properly perfected liens on the debtors' assets and (ii) was precluded from asserting a lien on any of the proceeds that may be derived from the sale of the debtors' assets. The court further ruled that DSP engaged in inequitable conduct and its right to credit bid would be limited to “foster a robust auction.”33 The court took issue with the fact that DSP did not dis- close to the court or the debtors that it had already recorded nancing statements against the Tower Assets. B. Inequitable Conduct Led to Limitation in Credit Bidding As a result of DSP's inequitable conduct, the court limited its right to credit bid. The court explained that, typically, a secured creditor should be allowed to credit bid the full amount of its claim at any sale of its collateral under section 363(b) of the Bankruptcy Code.34 This right is important to insure against the “undervaluation of the secured claim at an asset sale.”35 On the other hand, credit bidding is not an absolute right.36 Citing to In re Fisker, the bankruptcy court explained that a court could limit the right to credit bidding under section 363(k) if cause exists, “such as to ensure the success of the reorganization or to foster a competitive bidding environment.”37 The debtors advanced three reasons for nding that cause exists to limit DSP's credit bid rights. First, DSP did not have a lien on all of the company's assets. Second, DSP engaged in inequitable conduct that “chilled” the auction and depressed the potential sales price. Third, limiting the credit bid will restore enthusiasm for the sale and foster a robust bidding process. The court agreed with the debtors. DSP did not have the right to credit bid on assets that do not secure its allowed claim, namely the Tower Assets.38 Moreover, it was no secret that DSP acquired the loan from BB&T solely to eectuate a quick sale so that it could be the successful bidder of all of the debtors' as-

178 © 2015 Thomson Reuters, Norton Journal of Bankruptcy Law and Practice, Vol. 24 No. 2 Credit Bidding Rights Stalled: In re Fisker Automotive sets by using its credit bid.39 Most notably, DSP purposefully failed to dis- close that it led liens in connection with the Tower Assets and pressured the debtors to shorten the marketing period. The court concluded that the amount that DSP could credit bid is limited to $1.2 million for assets related to the debtors' radio business, and $12.7 million for assets related to the debtors' newspaper and printing business. IV. Lessons for Holders of Secured Debt The main take-away from the In re Fisker Automotive case is that a secured creditor's right to credit bid under section 363(k) of the Bankruptcy Code is not absolute; and if a court determines that credit bidding will chill (or freeze) other bids, the amount could be capped. Although this decision is nonprecedential and arguably fact specic,40 secured creditors should be aware of its potential implications. Furthermore, distressed investors who purchase secured claims prior to a bankruptcy ling, similar to Hybrid, should be aware of this decision's repercussions if followed by other courts. Although the court in In re Fisker Automotive did not necessarily penalize Hybrid for purchasing the Department of Energy's debt at such a steep discount,41 the court did explain that a bankruptcy auction would, among other things, help determine whether the price paid for the loan was in fact “fair and reasonable and in the best interests of the debtors' estates.”42 What recourse, however, do secured creditors have in preventing a cap on the amount of their credit bid? Interestingly, the In re Fisker Automotive decision stands in contrast to the United States Supreme Court's holding in RadLAX Gateway Hotel, LLC v. Amalgamated Bank,43 where the court discussed a secured creditor's ability to credit bid under a plan of reorganization rather than as a section 363 sale. To conrm a chapter 11 plan over the objection of a secured creditor, a plan must satisfy one of the three requirements set forth in section 1129(b)(2)(A): (i) the secured creditor retains its lien on the property and receives deferred cash payments, (ii) the property is sold free and clear of the lien “subject to section 363(k),” and the creditor receives a lien on the proceeds of the sale, or (iii) the secured creditor receives the “indubitable equivalent” of its claim.44 The Supreme Court stated that RadLAX Gateway Hotel, LLC v. Amalgam- ated Bank was “an easy case” and held that the debtors' attempt to conrm a plan that did not provide a secured creditor the right to credit bid its claim was in violation of the Bankruptcy Code.45 After the Supreme Court's decision in RadLAX Gateway Hotel, LLC v. Amalgamated Bank, secured creditors and distressed investors took comfort in the fact that their ability to credit bid would not be infringed upon. However, following the In re Fisker Automotive and The Free Lance-Star decisions their level of comfort has likely been diminished.46 It appears, however, that a secured creditor retains its right to credit bid under a plan of reorganization, while having that right limited by certain courts under a section 363 sale. It remains to be seen whether courts will follow suit, or take an approach that is more secured creditor friendly.47

NOTES: 1In re Fisker Automotive Holdings, Inc., 510 B.R. 55, 70 Collier Bankr. Cas. 2d (MB) 1525 (Bankr. D. Del. 2014), leave to appeal denied, 2014 WL 546036 (D. Del. 2014) and leave to appeal denied, 2014 WL 576370 (D. Del. 2014). 2RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 132 S. Ct. 2065, 182 L. Ed. 2d 967, 56 Bankr. Ct. Dec. (CRR) 144, 67 Collier Bankr. Cas. 2d (MB) 483, Bankr. L. Rep. (CCH) P 82218 (2012). Note, however, that the chief factual dierence between the two cases, however, is that the secured creditor sought to credit bid for its collateal when it is being sold under a plan of reorganization in RadLAX Gateway Hotel, LLC v. Amalgamated Bank, while the secured creditor in In re Fisker Automotive sought to credit bid for its collateral under a section 363 sale. 311 U.S.C.A. § 363(b). 4Norton Bankruptcy Law and Practice, § 44:17. 511 U.S.C.A. § 363(k). 611 U.S.C.A. § 363(k). 7In re Olde Prairie Block Owner, LLC, 464 B.R. 337, 348 (Bankr. N.D. Ill. 2011). 8In re Theroux, 169 B.R. 498, 499 n.3, 25 Bankr. Ct. Dec. (CRR) 1406, 74 A.F.T.R.2d 94-5592 (Bankr. D. R.I. 1994) (holding that there is no absolute entitled to credit bid). 9Greenblatt v. Steinberg, 339 B.R. 458, 463 (N.D. Ill. 2006) (“Consequently, even if . . . the bankruptcy court erroneously determined that [the secured creditors] failed to make an objection on [the rst priority secured lender's] lien, the [secured creditors] did not meet the second requirement of the sale procedures order, which required them to challenge the nature, extent, or validity of [the rst priority] lien.”) 10In re Akard St. Fuels, L.P., 2001 WL 1568332 (N.D. Tex. 2001) (precluding Morgan Stanley from credit bidding to because “a rapid sale of estate assets was necessary to prevent a sharp decline in the value of the estate”). 11In re Fisker Automotive Holdings, Inc., 510 B.R. 55, 70 Collier Bankr. Cas. 2d (MB) 1525 (Bankr. D. Del. 2014), leave to appeal denied, 2014 WL 546036 (D. Del. 2014) and leave to appeal denied, 2014 WL 576370 (D. Del. 2014). 12In re Fisker Automotive Holdings, Inc., 510 B.R. 55, 70 Collier Bankr. Cas. 2d (MB) 1525 (Bankr. D. Del. 2014), leave to appeal denied, 2014 WL 546036 (D. Del. 2014) and leave to appeal denied, 2014 WL 576370 (D. Del. 2014). 13In re Fisker Automotive Holdings, Inc., 510 B.R. 55, 70 Collier Bankr. Cas. 2d (MB) 1525 (Bankr. D. Del. 2014), leave to appeal denied, 2014 WL 546036 (D. Del. 2014) and leave to appeal denied, 2014 WL 576370 (D. Del. 2014). 14In re Fisker Automotive Holdings, Inc., 510 B.R. 55, 70 Collier Bankr. Cas. 2d (MB) 1525 (Bankr. D. Del. 2014), leave to appeal denied, 2014 WL 546036 (D. Del. 2014) and leave to appeal denied, 2014 WL 576370 (D. Del. 2014). 15In re Fisker Automotive Holdings, Inc., 510 B.R. 55, 70 Collier Bankr. Cas. 2d (MB) 1525 (Bankr. D. Del. 2014), leave to appeal denied, 2014 WL 546036 (D. Del. 2014) and leave to appeal denied, 2014 WL 576370 (D. Del. 2014). 16In re Fisker Automotive Holdings, Inc., 510 B.R. 55, 70 Collier Bankr. Cas. 2d (MB) 1525 (Bankr. D. Del. 2014), leave to appeal denied, 2014 WL 546036 (D. Del. 2014) and leave to appeal denied, 2014 WL 576370 (D. Del. 2014) (quoting In re Philadelphia Newspapers, LLC, 599 F.3d 298, 315–16, 52 Bankr. Ct. Dec. (CRR) 255, Bankr. L. Rep. (CCH) P 81719 (3d Cir. 2010), as amended, (May 7, 2010)). 17In re Fisker Automotive Holdings, Inc., 510 B.R. 55, 70 Collier Bankr. Cas. 2d (MB) 1525 (Bankr. D. Del. 2014), leave to appeal denied, 2014 WL 546036 (D. Del. 2014) and

180 © 2015 Thomson Reuters, Norton Journal of Bankruptcy Law and Practice, Vol. 24 No. 2 Credit Bidding Rights Stalled: In re Fisker Automotive leave to appeal denied, 2014 WL 576370 (D. Del. 2014) (quoting In re Philadelphia Newspapers, LLC, 599 F.3d 298, 315–16 n.14, 52 Bankr. Ct. Dec. (CRR) 255, Bankr. L. Rep. (CCH) P 81719 (3d Cir. 2010), as amended, (May 7, 2010). 18In re Fisker Automotive Holdings, Inc., 510 B.R. 55, 70 Collier Bankr. Cas. 2d (MB) 1525 (Bankr. D. Del. 2014), leave to appeal denied, 2014 WL 546036 (D. Del. 2014) and leave to appeal denied, 2014 WL 576370 (D. Del. 2014) (emphasis added) (quoting In re Philadelphia Newspapers, LLC, 599 F.3d 298, 315–16 n.14, 52 Bankr. Ct. Dec. (CRR) 255, Bankr. L. Rep. (CCH) P 81719 (3d Cir. 2010), as amended, (May 7, 2010). 19In re Fisker Automotive Holdings, Inc., 510 B.R. 55, 70 Collier Bankr. Cas. 2d (MB) 1525 (Bankr. D. Del. 2014), leave to appeal denied, 2014 WL 546036 (D. Del. 2014) and leave to appeal denied, 2014 WL 576370 (D. Del. 2014). 20In re Fisker Automotive Holdings, Inc., 510 B.R. 55, 70 Collier Bankr. Cas. 2d (MB) 1525 (Bankr. D. Del. 2014), leave to appeal denied, 2014 WL 546036 (D. Del. 2014) and leave to appeal denied, 2014 WL 576370 (D. Del. 2014). 21In re Fisker Automotive Holdings, Inc., 510 B.R. 55, 70 Collier Bankr. Cas. 2d (MB) 1525 (Bankr. D. Del. 2014), leave to appeal denied, 2014 WL 546036 (D. Del. 2014) and leave to appeal denied, 2014 WL 576370 (D. Del. 2014) (citing In re Daufuskie Island Proper- ties, LLC, 441 B.R. 60 (Bankr. D. S.C. 2010)). 22In re Fisker Automotive Holdings, Inc., 510 B.R. 55, 70 Collier Bankr. Cas. 2d (MB) 1525 (Bankr. D. Del. 2014), leave to appeal denied, 2014 WL 546036 (D. Del. 2014) and leave to appeal denied, 2014 WL 576370 (D. Del. 2014). 23The court's decision was predicated upon a number of case-specic factual issues, such that the decision may be viewed as “nonprecedential” and limited to its facts. Speci- cally, the court stated, on the record, that: [T]he Third Circuit has this procedure for issuing nonprecedential opinions. And those apply just to the parties and are not to be precedent. And I think that's the case here, because really bankruptcy judges have the unenviable duty of keeping a case moving, and that doesn't always permit time for the kind of consideration that you would want to put into a decision under normal circumstances. In re Fisker Automotive Holdings, Inc., No. 13-13087, ECF No. 445, Ex. A, p. 135:8–15 (Bankr. D. Del. Jan. 14, 2014). While the court's limiting comments on the record are not repeated in the opinion, it is currently unpublished and arguably limited in its application to the parties and the case. 24Recall that the secured creditors unsuccessfully argued that the “for cause” exemption should be reserved for situations where a creditor has engaged in inequitable conduct, a prop- osition rejected by the court in In re Fisker and by the Third Circuit in In re Philadelphia Newspapers. In re Fisker Automotive Holdings, Inc., 510 B.R. 55, 70 Collier Bankr. Cas. 2d (MB) 1525 (Bankr. D. Del. 2014), leave to appeal denied, 2014 WL 546036 (D. Del. 2014) and leave to appeal denied, 2014 WL 576370 (D. Del. 2014); In re Philadelphia Newspapers, LLC, 599 F.3d at 315–16 n.14. 25See In re The Free Lance-Star Publishing Co. of Fredericksburg, VA, 512 B.R. 798 (Bankr. E.D. Va. 2014), appeal denied, 512 B.R. 808 (E.D. Va. 2014). 26In re The Free Lance-Star Publishing Co. of Fredericksburg, VA, 512 B.R. 798, 801–02 (Bankr. E.D. Va. 2014), appeal denied, 512 B.R. 808 (E.D. Va. 2014). 27In re The Free Lance-Star Publishing Co. of Fredericksburg, VA, 512 B.R. 798, 802 (Bankr. E.D. Va. 2014), appeal denied, 512 B.R. 808 (E.D. Va. 2014). 28In re The Free Lance-Star Publishing Co. of Fredericksburg, VA, 512 B.R. 798, 802 (Bankr. E.D. Va. 2014), appeal denied, 512 B.R. 808 (E.D. Va. 2014). 29In re The Free Lance-Star Publishing Co. of Fredericksburg, VA, 512 B.R. 798, 802 (Bankr. E.D. Va. 2014), appeal denied, 512 B.R. 808 (E.D. Va. 2014). 30In re The Free Lance-Star Publishing Co. of Fredericksburg, VA, 512 B.R. 798, 803

(Bankr. E.D. Va. 2014), appeal denied, 512 B.R. 808 (E.D. Va. 2014). 31In re The Free Lance-Star Publishing Co. of Fredericksburg, VA, 512 B.R. at 800. 32In re The Free Lance-Star Publishing Co. of Fredericksburg, VA, 512 B.R. 798, 800 (Bankr. E.D. Va. 2014), appeal denied, 512 B.R. 808 (E.D. Va. 2014). 33In re The Free Lance-Star Publishing Co. of Fredericksburg, VA, 512 B.R. 798, 801 (Bankr. E.D. Va. 2014), appeal denied, 512 B.R. 808 (E.D. Va. 2014). 34In re The Free Lance-Star Publishing Co. of Fredericksburg, VA, 512 B.R. 798, 804 (Bankr. E.D. Va. 2014), appeal denied, 512 B.R. 808 (E.D. Va. 2014) (citing In re SubMicron Systems Corp., 432 F.3d 448, 459–60, 45 Bankr. Ct. Dec. (CRR) 232, 55 Collier Bankr. Cas. 2d (MB) 1077, Bankr. L. Rep. (CCH) P 80436 (3d Cir. 2006)). 35In re The Free Lance-Star Publishing Co. of Fredericksburg, VA, 512 B.R. at 804. 36In re The Free Lance-Star Publishing Co. of Fredericksburg, VA, 512 B.R. 798, 805 (Bankr. E.D. Va. 2014), appeal denied, 512 B.R. 808 (E.D. Va. 2014) (citing In re Antaeus Technical Services, Inc., 345 B.R. 556, 565 (Bankr. W.D. Va. 2005)). 37In re The Free Lance-Star Publishing Co. of Fredericksburg, VA, 512 B.R. at 805 (citing In re Fisker Auto. Holdings, Inc., 510 B.R. at 60–61 and quoting Philadelphia Newspapers, 599 F.3d at 316, n.14). 38In re The Free Lance-Star Publishing Co. of Fredericksburg, VA, 512 B.R. at 806. 39In re The Free Lance-Star Publishing Co. of Fredericksburg, VA, 512 B.R. 798, 806 (Bankr. E.D. Va. 2014), appeal denied, 512 B.R. 808 (E.D. Va. 2014). 40See infra n.24. 41Fifteen cents on the dollar. 42Then court stated, on the record, that: But that was not an auction under the auspices of this Court. That was an auction that was not noticed by this Court. And that was not marketed under the auspices of this Court. So I don't take great comfort in the fact that there was a Department of Energy auction for debt. And I think that in order for me, at the end of the case, to determine whether or not the price paid is fair and reasonable and in the best interests of the debtors' estates, I think that an auction will provide that mechanism, that it otherwise really would not be available for the Court's consideration. In re Fisker Automotive Holdings, Inc., No. 13-13087, ECF No. 445, Ex. A, p. 137:11–20 (Bankr. D. Del. Jan. 14, 2014). 43RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 132 S. Ct. 2065, 182 L. Ed. 2d 967, 56 Bankr. Ct. Dec. (CRR) 144, 67 Collier Bankr. Cas. 2d (MB) 483, Bankr. L. Rep. (CCH) P 82218 (2012). 4411 U.S.C.A. § 1129(b)(2)(A). 45RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 132 S. Ct. at 2073. 46In re RML Development, Inc., 59 Bankr. Ct. Dec. (CRR) 198, 2014 WL 3378578 (Bankr. W.D. Tenn. 2014) (citing to In re Fisker and concluding that credit bidding under section 36(k) does not allow the holder of an allowed secured claim to exercise an absolute right to purchase its collateral and oset that purchase by its allowed secured claim). 47Hybrid requested that the United States District Court for Delaware certify to the Third Circuit its appeal from the bankruptcy court's decision. See In re Fisker Automotive Holdings, Inc., 2014 WL 576370 (D. Del. 2014). The district court denied Hybrid's request because there is controlling authority in the form of section 363(k) and the Third Circuit's decision in In re Philadelphia Newspaper. In re Fisker Automotive Holdings, Inc., 2014 WL 576370 (D. Del. 2014).