A credit bid is a secured creditor's right to bid the amount of its allowed secured debt — instead of cash — to acquire the collateral at a foreclosure or a Bankruptcy Code section 363 sale. The lender effectively uses what it is owed as currency to take the asset.
Credit bidding is something a secured lender does to take its own collateral. It is distinct from a third-party note purchase, where a buyer pays cash for the loan itself. A lender weighing whether to credit-bid and operate an asset may instead prefer a clean cash sale of the note.
The secured creditor holding the lien on the collateral, up to the amount of its allowed secured claim, at a foreclosure or section 363 sale.
A credit bid has the lender take the collateral using its own debt; selling the note converts the loan to cash and hands the asset and process to a buyer.
No — we are a third-party cash buyer of loans and REO, not a lender credit-bidding a position. Request a confidential review.