Hybrid Tech Holdings LLC will appeal a ruling by United States Bankruptcy Judge Kevin Gross capping its right to "credit bid" for collapsed luxury hybrid car maker Fisker Automotive Inc. at $25 million. Hybrid said in court papers filed Monday in U.S. District Court in Wilmington, Delaware that the case should go directly to the US Court of Appeals in Philadelphia and bypass the US District Court, to allow Fisker's auction to proceed efficiently in February and to ensure the appeal isn't mooted by a sale.
Gross issued a ruling on Jan. 17 that Hybrid's ability to use debt forgiveness to bid for Fisker’s assets was properly limited at $25 million rather than the $75 million that Hybrid proposed. According to Gross, a limit would promote competitive bidding that wouldn't take place if Hybrid was allowed to use the full amount of its claim. The judge also cited concerns over whether Hybrid's claim is fully secured.
According to Hybrid, time is of the essence with the Fisker auction close at hand, adding that "there is no controlling authority directly addressing the issue of a bankruptcy court's authority to limit or deny a secured creditor's right to credit bid for the purposes of fostering a competitive auction."
Hybrid claims that Gross's ruling "eviscerates the rights of a secured creditor to credit bid" since the US bankruptcy code does not allow courts to “arbitrarily cap a secured creditor's credit bid on the basis of the price paid to acquire the secured claim."
Hybrid also cited the impact of the ruling on US government lending programs aimed at promoting growth in fledgling industries like alternative-energy vehicles. Hybrid added that the ruling creates "substantial uncertainty" for possible bidders on distressed assets if they can't enforce the same rights the government would have in a bankruptcy.