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Bankruptcy — standing

By: WISCONSIN LAW JOURNAL STAFF//January 16, 2014//

Bankruptcy — standing

By: WISCONSIN LAW JOURNAL STAFF//January 16, 2014//

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United States Court of Appeals For the Seventh Circuit

Civil

Bankruptcy — standing

A party who did not bid at an auction lacks standing to challenge the result.

“Natural Chem says that it did not post the bond because, under the auction’s terms, if it had been the high bidder and not come up with at least $3 million (or the value of the winning bid, if lower) as soon as the sale was approved, the bond would have been forfeited as partial compensation for the creditors’ losses from delay (New Energy was losing money) and the need to rerun the auction. Natural Chem wanted to propose leasing the plant for a year with an option to buy it for $4 million or more. The structure of its proposed offer was incompatible with a requirement of cash up front. Yet bankruptcy courts are entitled to require cash bids, rather than complex and hard-to-value bids including leases and options. Cash bids are comparable; the sort of bid Natural Chem wanted to make could not easily have been compared against others. Natural Chem chose not to play by the auction’s rules. That was its right—but, because it did not bid, it also was not harmed by the outcome. Thus In re Colony Hill Associates, 111 F.3d 269 (2d Cir. 1997), does not assist Natural Chem. Colony Hill dealt with a situation in which lack of notice plus a rival’s misconduct prevented a person from bidding; Natural Chem’s own choices led it not to bid.”

Affirmed.

13-2501 In the matter of: New Energy Corp.

Appeal from the United States District Court for the Northern District of Indiana, Miller, J., Easterbrook, J.

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