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(Updates with excerpt from ruling in third paragraph.)
June 28 (Bloomberg) -- Amalgamated Bank can bid for the InterContinental Hotel at O’Hare International Airport near Chicago using the amount it is owed by bankrupt owner River Road Hotel Partners LLC, a federal appeals court ruled.
The three-judge panel in Chicago today affirmed a ruling by U.S. Bankruptcy Judge Bruce Black that denied River Road’s motion to prevent its largest creditor, Amalgamated, from making a so-called credit-bid at auctions for the assets.
“Because the debtors’ proposed auctions would deny secured lenders the ability to credit bid, they lack a crucial check against undervaluation,” the judges said in a filing in the 7th U.S. Circuit Court of Appeals. A different appeals court last year denied a credit-bid in the Chapter 11 case of the owners of the Philadelphia Inquirer newspaper.
Black is scheduled to hold a hearing tomorrow on whether to approve a Chapter 11 plan for River Road proposed by Amalgamated Bank. The bank would take control of the assets and sell them under the plan. River Road wasn’t allowed to submit its own plan until after the appeal was decided.
River Road filed for Chapter 11 creditor protection in 2009 after failing to negotiate new loan terms with secured lenders. Last June, River Road asked Black to approve procedures for an auction of the assets.
The appeal is River Road Hotel Partners v. Amalgamated Bank, 10-3597, 7th U.S. Circuit Court of Appeals (Chicago). The bankruptcy case is In re River Road Hotel Partners LLC, 09- 30029, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).
--With assistance from Andrew Harris in Chicago. Editors: Stephen Farr, Glenn Holdcraft.
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