The bankruptcy sale process presents unique opportunities for buyers wishing to obtain distressed assets at attractive prices. The Trustee or Debtor, in the capacity of seller, is often able to transfer title to the assets free and clear of all pre-petition liens and other interests without the consent of the holders of these interests. Bankruptcy sales also provide opportunities for a Trustee or Debtor to assign related contracts and leases to purchasers, despite pre-bankruptcy defaults or contractual provisions prohibiting assignment.
Bankruptcy sales can be effectuated pursuant to either § 363 of the Bankruptcy Code or as part of the Debtor's plan of liquidation or reorganization. In either case, the bankruptcy sale must be approved by the bankruptcy court after notice to all parties. While so-called § 363 sales require only a short 20-day notice period, some courts have imposed restrictions on the rights of Trustees or Debtors to accomplish asset sales outside of the plan confirmation process.
The bankruptcy sale process can be structured in a variety of ways including auctions, private sales, and going concern transactions. Wiley Rein has handled hundreds of bankruptcy sales of all sizes over the years, representing buyers, sellers, lenders, and other interested parties. Our Team has deep and broad experience in obtaining "stalking horse" status, structuring auctions, and crafting bidding procedures.
For more information on bankruptcy sales, see the following:
- Bankruptcy Asset Sales
- How Bankruptcy Sales Really Work
- Role of the Federal Communications Commission in the Sale of Bankruptcy Assets
ISSUE: DECEMBER 5, 2013
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March 18, 2014