Calvinball Cannot Be Play on this Court: The Sanctity of Auction Procedures in Bankruptcy

Abstract

The integrity of the auction process in bankruptcy cases and the right of bidders to rely on rules prescribed in a court order issued pursuant to notice and a hearing must be given high priority. In the Comdisco decision, the court correctly recognized that creditors depend on successful auctions to maximize the value of estate assets. If bidders come to believe that court-ordered auction rules can be manipulated or disregarded by stalking horse bidders, then the auction process is prevented and creditors in future cases will suffer a grievous economic injury. Companies otherwise willing to purchase bankruptcy estate assets will simply refuse to participate in a process where they are constantly acting at their economic peril.

Keywords: Bankruptcy, Auction, Stalking Horse, Comdisco