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On Feb. 21, 2018, the U.S. Bankruptcy Court for the District of Delaware issued its opinion in Stanley Jacobs Prod. Ltd. v. 9472541 Can. Inc. (In re Thane Int'l Inc.).[1] The issue was whether an executory contract that was neither affirmatively assumed nor rejected was assumed and assigned in a § 363 sale transaction.

Orders approving the sale of assets in bankruptcy provide the required authorization for the disposition of estate property outside of the ordinary course of the debtor’s business. Such orders may, among other things, allow for the sale of assets free and clear of interests held by third parties and offer good-faith purchasers protections from subsequent efforts to affect the validity of such sales, even in the event of reversal or modification on appeal.

[1]The recent case of In re Energy Future Holdings[2] highlights the difficulties and risks of using break-up fees within chapter 11 cases.

On Oct. 24, 2017, the U.S. Court of Appeals for the Third Circuit in In re Pursuit Capital Management LLC[1] struck down an appeal as moot pursuant to a strict interpretation of Bankruptcy Code § 363(m) in large part due to the appellant’s failure to seek a stay of a sale order in the lower court.

State court receiverships have become a popular alternative to federal bankruptcy proceedings for the sale of distressed businesses.[1] In Wisconsin, Wis. Stats. Chapter 128 sets forth a statutory process allowing for the liquidation of a debtor company’s assets and the distribution of the sale proceeds to creditors in a state court-supervised proceeding. There are several benefits associated with initiating a Chapter 128 receivership (which can be voluntary or involuntary) rather than a bankruptcy proceeding.

It is no secret that restaurants and bars have high mortality rates. When these businesses fail, liquor licenses are frequently the only remaining valuable asset. Liquor licenses are crucial to restaurants and other hospitality venues’ ongoing operations and can be worth a lot of money.