While corporate restructuring is an option financially distressed companies often proactively explore to reduce their debt burden, another alternative that has recently gained some notoriety is a liability management transaction (LMT). Put simply, an LMT is a seemingly clever maneuver to modify capital structures by shifting collateral around to benefit one set of creditors at the expense of others. This assists the company with fresh capital, suspended/waived debt service obligations, extended maturities, or some combination thereof.
When a business is in financial trouble, sometimes the best way out is to sell the business as some form of a going concern. Such a sale usually yields more than a piecemeal liquidation of the assets. Losses to creditors are minimized, as are losses to guarantors of debt.
Usually, rather than undertaking a distressed sale, it is better to turn a business around so that it is more profitable and will either sell more or generate cash to pay creditors. However, selling is necessary when that option is not viable, particularly in the eyes of secured lenders.
In late 2024, struggling retailer and chapter 11 debtor Big Lots Inc. and its debtor affiliates (together, “Big Lots” or the “debtors”) attempted a § 363 sale of substantially all of their assets to an entity affiliated with Nexus Capital Management LP.
In the realm of bankruptcy auctions, the goal is to maximize proceeds for stakeholders through a process that is transparent and beyond reproach. This article discusses strategies for running a pre-auction process to choose a stalking horse, ensuring that no stone is left unturned in the pursuit of maximizing value.
For nearly 20 years, insolvency estate professionals have utilized “remnant asset” sales as a prudent and efficient means to fully and finally administer estate assets, and thereby fulfill their fiduciary duty to maximize estate value for the benefit of creditors.[1] This simple practice, which has become commonplace in the restructuring industry, applies to all wind-down contexts regardless of approach, including liquidations under chapters 7 and 11, and subchapter V of the Bankruptcy Code, assignments for the benefit of creditors, state and feder
The existence of a competing bidder does not put the buyer on notice of an ‘adverse interest’ to avoid dismissal for mootness under Section 363(m), the Sixth Circuit BAP says.
