RadLAX Gateway Hotel v. Amalgamated Bank (2011)
- Docket
- 11-166
- Decided
- 2011-01-01
Summary
Question: Under the bankruptcy code, may RadLAX pursue a Chapter 11 bankruptcy plan which proposes to sell assets free of liens, without allowing Amalgamated Bank to bid on credit, but instead providing the creditor with the equivalent of its claim? Conclusion: No. In a unanimous opinion written by Justice Antonin Scalia, the Court held that RadLAX could not obtain confirmation of a Chapter 11 bankruptcy plan that provided for the sale of its assets free from lien without permitting Amalgamated Bank to credit-bid at the sale. According to Justice Scalia, clause (ii) of § 1129(b)(2)(A) of the bankruptcy code specified that when property was sold free of lien, it was subject to Section 363(k) of the code. Section 363(k) in turn allowed the creditor to credit-bid at the sale, up to the amount of its claim. Although RadLAX proposed to repay Amalgamated Bank with the proceeds of the sale, its plan to preclude Amalgamated Bank from credit-bidding at the sale violated the clear language of the act. Justice Scalia rejected RadLAX argument that clause (iii) allowed RadLAX's plan because the plan guaranteed Amalgamated Bank the indubitable equivalent of its claim. He concluded that the general language of clause (iii) did not control the specific matter dealt with in clause (ii). Justice Scalia also rejected RadLAX's argument that clause (ii) was not more specific than clause (iii) because (ii) provided procedural protections but (iii) provided substantive protections. Justice Anthony Kennedy took no part in the consideration of the case.