Source: http://www.thesecuredlender-digital.com/thesecuredlender/201009?pg=83
Timestamp: 2019-04-24 12:28:08+00:00

Document:
In prior issues of The Secured Lender, we reported on a developing circuit court split regarding the treatment of certain challenges to § 363 sales. In Clear Channel Outdoor, Inc. v. Knupfer, 391 B.R. 25 (9th Cir. BAP 2008), the Ninth Circuit Bankruptcy Appellate Panel held that § 363(m) of the Bankruptcy Code does not preclude reversal, on appeal, of the term in the sale order that the assets were transferred in the § 363 sale free and clear of any junior liens, even though the sale was not stayed pending appeal and there were no allegations of bad faith. Through a narrow, literal and inexplicable reading of § 363(m), the court in Clear Channel determined that, although § 363(m) blocks reversal of an order authorizing a sale to a good faith purchaser on appeal, it does not prohibit the reversal of the free and clear terms of such order. As a result, the senior secured lender in Clear Channel, who credit bid its debt to purchase assets in a § 363 sale, was held to have purchased the assets subject to the existing liens.
The Ninth Circuit’s interpretation of § 363(m) is problematic and, if followed by other courts, would obviously have a chilling effect on bankruptcy sales. However, in In re West Point Stevens, Inc., 600 F.3d 231 (2d Cir. 2010), the Second Circuit came to the opposite conclusion and held that, under § 363(m), all challenges to a § 363 sale other than a challenge to good faith are statutorily moot unless the sale order has been stayed. Recently, in In re Polaroid Corp., the Eighth Circuit had the opportunity to address the issue and agreed with the approach of the Second Circuit.
moved to stay the sale pending appeal.
bankruptcy court and the district court.
one of five specified conditions is met.
363(f) to be applicable in the first place.
of the sale, not with its authorization.
Acorn’s appeal as statutorily moot.

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