Radlax Gateway Hotel, LLC v. Amalgamated Bank
132 S. Ct. 2065
| SCOTUS | 2012Background
- RadLAX debtors borrowed $142 million secured by blanket lien on all assets, with Amalgamated Bank as trustee.
- Debtors became insolvent after parking structure costs exceeded budget; owed over $120 million with accruing interest.
- Debtors sought Chapter 11 cramdown confirmation under 11 U.S.C. §1129(b)(2)(A) to sell assets and repay the Bank.
- Plan proposed auction procedures with a stalking-horse bid; Bank would be barred from credit-bidding and would have to bid cash.
- Bank objected to cramdown because the sale would be free of liens without allowing credit-bidding; courts below rejected the plan under §1129(b)(2)(A)(ii).
- Debtors argued clause (iii) could provide the indubitable equivalent; Court ultimately held that the specific provisions governing credit-bidding control and deny the plan confirmation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1129(b)(2)(A) allows a sale free of liens without credit-bidding. | RadLAX contends clause (iii) salvages the plan | Amalgamated Bank argues clause (ii) requires credit-bidding for such sale | No; plan cannot be confirmed without credit-bidding. |
| Whether the indubitable equivalent in clause (iii) can justify the plan. | Debtors rely on clause (iii) as ultimate protection | Bank argues clause (iii) does not override clause (ii) | No; cannot satisfy clause (iii) to compensate for denied credit-bidding. |
| How the general/specific canon affects interpretation of clauses (ii) and (iii). | Debtors claim equal treatment of clauses | Bank argues specific governs general | Canon requires clause (ii) controls; general language cannot swallow specific provision. |
Key Cases Cited
- Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992) (specific governs the general when both exist in a comprehensive scheme)
- Varity Corp. v. Howe, 516 U.S. 489 (1996) (textual authority on specific provisions within a comprehensive statute)
- HCSC-Laundry v. United States, 450 U.S. 1 (1981) (specific governs when interrelated with general provisions)
- D. Ginsberg & Sons, Inc. v. Popkin, 285 U.S. 204 (1932) (illustrates and supports specific governs general canon)
- United States v. Chase, 135 U.S. 255 (1890) (illustrates general/specific statutory interpretation principle)
- River Road Hotel Partners, LLC v. Amalgamated Bank, 651 F.3d 642 (2011) (Seventh Circuit holding on credit-bidding prerequisite to cramdown)