## Facts

- RadLAX Gateway Hotel, LLC and RadLAX Gateway Deck, LLC owned a hotel near Los Angeles International Airport and an adjacent parking structure.
- In 2007, RadLAX borrowed approximately $142 million, secured by substantially all of its assets, to finance acquisition and construction-related costs.
- After the 2008 downturn and cost overruns, RadLAX filed Chapter 11 petitions in August 2009, owing roughly $120 million to the secured lender, represented by Amalgamated Bank as trustee/agent.
- RadLAX proposed a cramdown plan under 11 U.S.C. § 1129(b)(2)(A) that would sell substantially all assets at auction free and clear of liens and pay creditors from cash proceeds.
- The plan’s bidding procedures barred the secured creditor from credit-bidding (offsetting its secured debt against the purchase price).
- Amalgamated Bank objected, arguing that a free-and-clear sale under § 1129(b)(2)(A)(ii) must be conducted subject to § 363(k), which permits credit-bidding.
- The bankruptcy court rejected RadLAX’s proposed procedures, and the Seventh Circuit affirmed; the Supreme Court granted review to resolve whether debtors could use § 1129(b)(2)(A)(iii) (“indubitable equivalent”) to confirm such a plan without credit-bidding.

## Issues

1. Whether a Chapter 11 debtor may confirm a cramdown plan providing for a sale of collateral free and clear of liens while denying the secured creditor the right to credit-bid.
2. Whether the “indubitable equivalent” option in 11 U.S.C. § 1129(b)(2)(A)(iii) can be used to bypass the credit-bidding requirement incorporated by § 1129(b)(2)(A)(ii) through § 363(k).

## Decision

- The Supreme Court affirmed the judgment below in a unanimous decision authored by Justice Scalia (Justice Kennedy recused).
- A cramdown plan proposing to sell encumbered assets free and clear of liens cannot be confirmed if it denies the secured creditor the right to credit-bid.
- When the plan’s treatment fits § 1129(b)(2)(A)(ii) (sale free and clear), the debtor must satisfy that clause’s requirement that the sale be conducted subject to § 363(k).
- The debtor may not rely on § 1129(b)(2)(A)(iii)’s “indubitable equivalent” language to authorize what § 1129(b)(2)(A)(ii) specifically regulates and, on the proposed terms, disallows.

## Legal Principles

- Under 11 U.S.C. § 1129(b)(2)(A), the “fair and equitable” treatment of secured claims is defined through distinct statutory alternatives; a plan that proposes a free-and-clear sale is governed by § 1129(b)(2)(A)(ii).
- Section 1129(b)(2)(A)(ii) requires that a free-and-clear sale be “subject to section 363(k),” preserving the secured creditor’s right to credit-bid.
- A general, residual provision (the “indubitable equivalent” clause in § 1129(b)(2)(A)(iii)) cannot be used to circumvent a more specific provision that directly addresses the transaction at issue (the free-and-clear sale clause in § 1129(b)(2)(A)(ii)).
- Statutory interpretation disfavors readings that render a detailed provision superfluous; treating clause (iii) as an all-purpose alternative for free-and-clear sales would effectively nullify clause (ii)’s credit-bidding protection.

## Conclusion

A Chapter 11 debtor cannot confirm a cramdown plan that sells secured collateral free and clear of liens while prohibiting credit-bidding; the plan must comply with § 1129(b)(2)(A)(ii)’s incorporation of § 363(k), and the “indubitable equivalent” clause cannot be used to evade that requirement.


RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 132 S. Ct. 2065 (2012)