In the Matter of New Energy Corp. (Appeal of Natural Chem Holdings, LLC)

Summarized by Daniel Waxman , KEWA Financial Inc.
12 years 2 months ago

Citation:

In re New Energy Corp., Case No. 13-2501 (7th Cir. Jan. 15, 2014)

Tag(s):

Ruling:

Party who is not a creditor and who elected not to bid at an auction sale does not have standing to contest approval of that sale. In dicta, the Court also stated that: (i) only the trustee (debtor-in-possession) may invoke section 363(n); and (ii) the creation of a joint venture, in an of itself, does not establish collusion for purposes of section 363(n).

Procedural context:

Appeal from the District Court for the Northern District of Indiana, affirming decision of Bankruptcy Court for the Northern District of Indiana approving sale of estate assets pursuant to section 363.

Facts:

The Debtor, New Energy Corp., conducted an auction sale of its assets pursuant to section 363 of the Bankruptcy Code. The winning bidder at the sale was a joint venture. Appellant, Natural Chem Holdings, LLC, a non-creditor, considered purchasing the assets, but ultimately did not post the required bond and elected not to bid. Nonetheless, Natural Chem objected to approval of the sale on the basis that the creation of a joint venture between prospective bidders constituted collusion pursuant to section 363(n). The Bankruptcy Court overruled the objection, based upon a lack of standing, and approved the sale. Natural Chem did not seek a stay, but appealed the decision to the District Court.

Judge(s):

Flaum, Easterbrook, Griesbach (District Judge)

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