In re PW
United States Bankruptcy Appellate Panel for the Ninth Circuit
391 B.R. 25 (2008)
Real estate developer PW, LLC (PW) filed chapter 11, and at the request of senior secured creditor DB Burbank, LLC (DB), the court appointed a trustee, who agreed to sell PW's property to DB by credit bid for roughly $41.4 million if no higher bidder emerged. Clear Channel Outdoor, Inc. (Clear Channel), a junior lienholder with a $2.5 million claim, objected that the sale wouldn't satisfy any condition for a free-and-clear sale under § 363(f), but the court approved the sale over its objection and found DB a good-faith purchaser; when no higher bid emerged, the sale closed with DB's credit bid generating no proceeds Clear Channel's lien could attach to, and Clear Channel's request for a stay pending appeal was denied. Clear Channel appealed the sale and confirmation orders to the Bankruptcy Appellate Panel.
Whether a junior lienholder may be stripped of its lien, outside of a reorganization plan, by a judicially authorized, good-faith purchase of bankruptcy estate property for less than the aggregate amount of all liens on the property and where no legal or equitable proceeding could compel monetary satisfaction of the lien for less than full value.