IN RE PW
391 B.R. 25 (2008)
NATURE OF THE CASE: Clear Channel (P), a junior creditor, sought reversal of a Sale Order
and the Confirmation Order.
FACTS: PW, LLC (PW), owned prime real estate in Burbank, California. DB Burbank, LLC (D),
held a claim of first priority of more than $40 million secured by the property. PW's filed
chapter 11 bankruptcy Knupfer was appointed as trustee. D, working with the Trustee,
organized a campaign to consolidate all of PW's property and development rights and to sell
this package, free and clear of all claims and encumbrances, at a sale supervised by the
bankruptcy court. D and the Trustee entered into an agreement called a Binding Term Sheet
and if there were no bidders D would buy for a Strike Price which just happened to be the
amount D was owed. D also agreed to pay $800,000 for administrative fees and other expenses.
The court agreed and the Trustee moved to approve the sale free and clear of all liens. The
only problem was with P. There was a consensual lien securing a claim of $2.5 million in
favor of P. P opposed the sale. D was the highest bidder, paying its consideration by
credit-bidding the entire amount of its debt. Relying solely on 363(f)(5), the court
confirmed the sale to D free and clear of P's lien. The court then denied a stay of the sale
pending appeal, as did the motions panel. P appealed seeking reversal of both the Sale Order
and the Confirmation Order.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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