Asset Sales

Attention, Buyers of Assets in Bankruptcy: How to Be a Good-Faith Purchaser and Ensure that Any Post-Closing Challenges Will Be Dismissed as Statutorily Moot Under § 363(m) of the Bankruptcy Code

Two recent district court decisions, each involving appeals of a bankruptcy sale order where the appellant(s) failed to obtain a stay pending appeal, provide insight into statutory mootness under § 363(m) of the Bankruptcy Code. In both In re HDR Holdings Inc.[1] and Barnes v.

Bring Me a Higher Bid: The Highest or Best Standard for § 363 Sales

More U.S. companies filed bankruptcies with liabilities exceeding $1 billion in 2020 than in any year since 2009.[1] Bankruptcy courts are often left with difficult decisions in these complex bankruptcies, including whether to approve the winning bid in an asset sale under § 363. Part of the difficulty is applying the standard for approving a winning bid.

The Stalking Horse: To Be or Not to Be?

“Stalking horse” is a term that instills hope in the minds of creditors and debtors while striking fear in the hearts of other bidders. When running a § 363 sale process, identifying a stalking-horse bidder (the bidder that submits the highest and best initial bid) lays the groundwork for the rest of the proceedings. The stalking-horse bid effectively sets the floor price for the assets and is used to entice other groups to pay more and eventually participate in an auction. So why would anyone choose to be the stalking horse?

Asset Sales - March 2021

What Is Collusion in a § 363 Auction?

Recent allegations of impropriety of bidders in the reorganization of Neiman Marcus Group Ltd. LLC should serve as a reminder to study the line between mere auction strategy and collusive bidding. The word “collusion” itself seems to cause confusion whenever it is uttered in the political or legal realms. Fortunately, in the context of bankruptcy sales, the Bankruptcy Code provides some parameters for what constitutes collusion.

The Sins of the Father: Successor Liability in § 363 Sales

One of the hallmarks of purchasing assets from a bankruptcy estate under § 363 of the Bankruptcy Code is the perceived ability of a buyer to purchase those assets “free and clear of any interest in such property” if certain conditions are met.[1] A common phrasing in many motions seeking to sell assets under § 363 is that the assets are to be sold “free and clear of all liens, claims and encumbrances.” But that is not what the statute actually says.

ABI Live Webinar: Navigating Ethical Issues During Asset Sales

ABI’s Asset Sales and Ethics and Professional Compensation Committees sponsored a great webinar on Feb. 10 titled "Navigating Ethical Issues During Asset Sales." More than 150 attendees heard panelists Steve Blank of King & Spalding, Joe Briggett of Lugenbuhl and Ken Mann of SC&H Capital discuss ethical issues professionals may face in asset sales, while weaving in some very entertaining, real-life stories from previous deals.

Asset Sales February 2021

Sales Under Subchapter V of Chapter 11

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.

Asset Sales November 2020