The right of a secured creditor to bid the secured debt it holds to purchase the collateral securing that debt from the debtor in a Chapter 11 proceeding (a credit bid) is now firmly established.  See “U.S. Supreme Court Resolves Circuit Split and Affirms Secured Creditors’ Right to Credit Bid Under Chapter 11 Plan,” Hedge Fund Law Report, Vol. 5, No. 25 (Jun. 21, 2012); and “Seventh Circuit Holds that Secured Lenders Must Have the Opportunity to Credit Bid in Asset Sales Under a Chapter 11 Plan,” Hedge Fund Law Report, Vol. 4, No. 24 (Jul. 14, 2011).  However, when the secured creditor purchased that debt at a steep discount, as is often the case in distressed debt transactions executed by hedge funds, issues may arise as to whether the creditor is entitled to credit bid up to the face amount of the debt it holds, or only a portion of that amount.  A U.S. District Court recently addressed this issue, and its analysis has implications for hedge funds that invest in secured credit.