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What happens when intervening events or a change of circumstances occurs that affects the value of the assets and the benefit to the estate when selling them to one bidder over another? Three recent cases provide some insight into what bankruptcy courts consider when a trustee’s or debtor’s business judgment is called into question because the ground beneath the parties has shifted during the sale process.
Background: The Business-Judgment Standard for § 363 Asset Sales
In January 2021, we published an article exploring the legislative history and broad provisions of subchapter V of chapter 11 as they relate to asset sales.[1] In that article, we acknowledged that liquidation and going-concern sales are possible under subchapter V, but predicted that the majority of § 363 sales under subchapter V would be of discrete assets because subchapter V was designed to encourage traditional reorganization.
We hope this report finds you and your family doing well. 2021 was another year of lockdowns and Zoom meetings, but also COVID-19 shots and slowly returning to the real world. Our committee leadership has strived to help its members navigate the ever-changing world of distressed sales via access to helpful content and the opportunity to engage in discussions on topics relevant to asset sales. Below are a few highlights of the committee’s activities over the past year.
The Asset Sales Committee is actively soliciting nominations for the Fourth Annual ABI Asset Sales Committee Sale of the Year Award. Details are set forth below. Please submit your best deal.
ABI’s Asset Sales Committee announced that In re Verity Health System of California Inc., Case No. 2:18-bk-20151-ER (C.D. Cal.), won the committee’s third annual “Asset Sale of the Year” award.
