A small business debtor who elects to proceed under subchapter V of chapter 11[1] has the same rights and powers to sell property under 11 U.S.C. § 363 as a trustee or a debtor in possession in a larger case.[2] But it remains to be seen whether subchapter V will be used by debtors who intend to sell substantially all of their assets in a § 363 sale, or to confirm liquidating plans.
Abe’s Boat Rentals Inc. filed for chapter 11 on April 27, 2018, in the U.S. Bankruptcy Court for the Eastern District of Louisiana. On Feb. 22, 2019, the debtor filed an Application for Order Authorizing Employment of Whelton Marine LLC as Marine Broker (the “Application to Employ”) in order to sell a 2008 Tiara 4300 Sovran yacht (the “vessel” or “M/V Heaven”).
The ABI Asset Sales Committee announced the winner of the second annual Asset Sale of the Year Award at the beginning of a July 22, 2020, Asset Sales Committee webinar titled, Evolving Landscape of Distressed M&A Activity.
When a retail debtor seeks to sell its assets in a chapter 11 proceeding pursuant to § 363 of the Bankruptcy Code, one of the key issues that often arises is whether the debtor will be permitted, as part of such sale, to assume and assign its store leases to the proposed buyer pursuant to § 365 of the Bankruptcy Code.
As the pace of chapter 11 cases quickens and the time frames within which theyare filed, administered and closed become condensed, so too do the issues that may arise with accelerated asset sales under § 363 of the Bankruptcy Code.
Thirty-three states and the District of Columbia permit some form of marijuana sales, and 11 states and the District of Columbia have enacted laws for the recreational sale and use of marijuana. Yet marijuana remains a “Schedule I” drug under the Controlled Substances Act,[1] equivalent to heroin under federal law.
If the ruling on the field stands, consumer credit contracts are ineligible for sale free and clear of consumer claims and defenses through a chapter 11 plan. Hon. James L. Garrity, Jr. in the Southern District of New York recently ruled that while § 363(o) does not apply directly to sales through chapter 11 plans, § 1129(a) nevertheless precludes an attempt to strip a consumer’s defenses and rights of recoupment against a buyer who purchases the consumer’s mortgage debt under a plan.
The Playbook: § 363 vs. § 1123
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