Credit bid
In a U.S. bankruptcy sale under section 363(k), an eligible secured claim holder may offset its allowed claim against the purchase price of the collateral, unless the court orders otherwise for cause.
Credit bid in round numbers
Hypothetical: an eligible US$40m secured claim is fully credited against a US$40m purchase price for the relevant collateral. The credited US$40m claim is extinguished. Cash costs, senior claims and other sale obligations require separate treatment; the auction price alone does not prove fair value.
Scroll horizontally to read all columns.
| Issue | Treatment |
|---|---|
| Eligibility | Allowed claim secured by the property; court may limit for cause |
| Purchase price offset | Eligible claim credited subject to sale terms |
| Claim after credit | Reduced by the amount credited |
| Other obligations | Cash costs and other required payments assessed separately |
Source: 11 U.S.C. 363(k): credit bidding.
Terms Related to Credit bid
Chapter 11 bankruptcy · Chapter 7 bankruptcy · Absolute priority rule · Senior debt · 363 sale · Loan-to-own · All of the glossary