  |
  |
  |
    
  
   |
 | |||
|
|
|
|
| |||
§ 1129(b)(2)(A)(i), which does not contain the specific reference to § 363(k) found in the specific sale alternative (ii). At least one court has accepted this argument, but the attempt has also been rejected by courts holding either that the sale exception in § 1111(b)(1)(A)(ii) applies only to sales where the creditor may credit bid, or that undersecured creditors must be allowed to match the sale price of any sale under a plan. Indefinite plan provisions for ultimate sale also do not fall within the § 1111(b) exception. One bankruptcy court decision extended this exception to deny a recourse claim to a nonrecourse secured creditor whose collateral was returned under a plan.
The third cram down alternative is to provide the secured creditor the "indubitable equivalent" of its security. The phrase "indubitable equivalent" was adopted from Judge Learned Hand's opinion in Murel Holding. While it appears in the Code as a "catch-all alternative" cram down provision, it has also been read as "express[ing] threshold requirements applicable to" all cram down alternatives.
Return of the collateral to the secured creditor is the simplest method of providing indubitable equivalent. Because the value of a secured claim is necessarily equal to (or less than) the value of the collateral securing the claim, return of the collateral necessarily provides the indubitable equivalent.
After an initial misstep, the published Fifth Circuit decision in Sandy Ridge correctly concludes that return of collateral necessarily satisfies the indubitable equivalent standard for the secured claim, because the value of an undersecured claim equals the value of the collateral pursuant to Section 506(a). In denying a petition for rehearing, the Fifth Circuit emphasized that its opinion did not determine the legal effect of the valuation in any action against the guarantors. A few earlier bankruptcy court decisions had denied confirmation of plans that sought to convey collateral as the indubitable equivalent of the secured claim.
While return of all of a secured creditor's collateral should always satisfy indubitable equivalence for the secured portion of an undersecured claim, this does not necessarily mean
