In Bankruptcy Saga, Judge May Limit Credit Bid on Free Lance-Star

The bankruptcy case of the Free Lance-Star Publishing Co. in Fredericksburg is shaping up to be the second in three months in which a court has limited a secured lender’s ability to bid on a company’s assets using the debt rather than cash, a process known as credit bidding.

The secured lender is Sandton Capital Partners, owed $37.9 million on a loan it bought in June. U .S. Bankruptcy Judge Kevin R. Huennekens in Richmond took a page from the playbook of a Delaware bankruptcy court by allowing Sandton to credit bid only $13.9 million of the secured claim at auctions