Amalgamated Bank Statement on Supreme Court's RadLAX Decision
NEW YORK, May 29, 2012 /PRNewswire/ -- Amalgamated Bank welcomes today's unanimous U.S. Supreme Court decision in RADLAX GATEWAY HOTEL, LLC, ET Al. v. Amalgamated Bank. The ruling affirmed the Bank's right, as trustee of the LongView Ultra Construction Loan Investment Fund (the "Fund"), to "credit bid" in an auction of its collateral by the bankrupt debtor. The Bank, as Trustee, along with its co-lender, is the largest senior secured creditor in the borrower's Chapter 11 bankruptcy proceeding, which has been ongoing since 2009.
By fighting this particular case all the way to the United States Supreme Court, Amalgamated significantly strengthened its ability to maximize the repayment to the Fund. The decision allows the Fund to proceed with its plans for the property with the expectation that the Fund's investors will substantially benefit from the eventual workout of this loan.
The property in question is the RadLAX Hotel and related parking deck at the Los Angeles International Airport. The Fund along with its co-lender provided $142 million for the purchase and renovation of the hotel and the construction of a parking deck, all using union labor. The borrower sought approval from the Bankruptcy Court to "cram down" what the Bank, as trustee, believed to be a low "stalking horse" bid for the property of $47.5 million, later raised to $55 million.
The borrower also sought to preclude the Bank from bidding all or part of its debt for the property in the auction – known as a "credit bid." Both the federal Bankruptcy Court and the U.S. Seventh Circuit Court of Appeals had earlier agreed that the Bank should be able to credit bid for the property, and the Supreme Court agreed. In addition to the plain language of the Bankruptcy Code, the Court pointed out that a contrary holding would prejudice, for example, the U.S. Government when it is a secured creditor, because it is required to obtain an appropriation if it wishes to bid cash for its collateral and, in all likelihood, would be unable to do so, thereby giving its debtors an unfair advantage.
SOURCE Amalgamated Bank