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Code § 363(f) permits sales free and clear if liens or other interests if (1) nonbankruptcy law would permit such a sale, (2) the interest holder consents, (3) the interest is a lien and the price "is greater than the aggregate value of all liens," (4) the interest is in bona fide dispute, or
(5) the interest holder could be compelled to accept money satisfaction of its interest. At such sales, Code § 363(k) permits lienholders to credit bid up to the amount of their allowed claims.
The reference to "aggregate value" of the liens in § 363(f)(3) raises the issue of whether collateral can ever be sold for less than the amount of the debt secured if the secured creditor opposes the sale. Some courts have held that "value" means the face amount of the lien, so the undersecured creditor's consent is always required.135 Other courts have held that "value" means the value of the lien as determined by the court pursuant to Code § 506, which implies that the secured creditor's consent is not required if the sale will generate the value of the property.136 The latter analysis makes sense because § 506 governs how liens are valued, and the secured creditors rights should be adequately protected by its right to credit bid under § 363(k), but is vulnerable to an argument that such a sale cannot benefit the estate.
135 Scherer v. Federal Nat'l Mortgage Ass'n (In re Terrace Chalet Apartments, Ltd.), 159 B.R. 821 (N.D. Ill. 1993); In re Perroncello, 170 B.R. 189 (Bankr. D. Mass. 1994); In re Heine, 141 B.R. 185 (Bankr. D. S.D. 1992); In re General Bearing Corp., 136 B.R. 361 (Bankr. S.D.N.Y. 1992).
136 In re WPRV-TV, Inc., 143 B.R. 315 (D. P.R. 1991), vacated on other grounds, 165 B.R. 1 (D. P.R. 1992), aff'd in part, rev'd in part, 983 F.2d 336 (1st Cir. 1993); In re Terrace Gardens Park Partnership, 96 B.R. 707 (Bankr.
W.D. Tex. 1989); In re Beker Indus. Corp., 63 B.R. 474 (Bankr. S.D.N.Y. 1986).
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