vol 16, num 1 | March 2019
 
 
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ASSET SALES
 
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Stalking-Horse Bid Protections: Getting the “Credit” You Deserve at the § 363 Auction
Khaled Tarazi
 
Khaled Tarazi
Bryan Cave Leighton Paisner LLP
Phoenix
 
 
Investors and those representing them go to great lengths to maximize the value of their deals in § 363 asset purchases. But if they’re not careful, they could easily find themselves in the following auction scenario, where a little ambiguity jeopardizes significant value that a “stalking horse” bidder thought it had already negotiated.

The Scenario
You’re an investor kicking the tires on a company in bankruptcy. You love the upside of this company, but you’re worried about expending significant time and money vetting the opportunity (including attorneys’ fees, quality-of-earnings analysis, valuation and appraisal work, and site visits), only to possibly end up in a bidding war with others taking a free ride on your due diligence.

 
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Section 363 vs. Out-of-Court Sales
Bruce Goldstein
 
Bruce Goldstein
Amherst Partners
Birmingham, Mich.
 
 
Over the past several years, financially distressed companies have increasingly used bankruptcy as the preferred method to sell significant assets or entire businesses. Section 363 of the Bankruptcy Code allows a chapter 11 debtor to sell assets outside the ordinary course of the debtor’s business, clear of existing liens and claims, if the debtor demonstrates a good business reason for the sale. Depending on the facts and circumstances, however, a sale of distressed assets via an out-of-court transaction may be the best path forward. This article examines the pros and cons of a sale pursuant to § 363 of the Bankruptcy Code (“363 sales”) versus an out-of-court transaction. This article is not meant to be an exhaustive outline of all of the pros and cons of these alternatives, but it is meant to provide a macro view of the major considerations required when acting as an advisor to an insolvent business or its creditors.
 
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ANNUAL SPRING MEETING REGISTRATION OPEN NOW!
Join the Asset Sales Committee at ABI's Annual Spring Meeting, one of the biggest insolvency events of the year! Mix professional development and networking at a variety of timely educational sessions, networking events, and optional programs — all in the heart of Washington, D.C.

This year, the Committee will be pairing with the Ethics and Professional Compensation Committee to host a session titled, Asset Sales, Not So Free and Not So Clear. Speakers for this session include:

  • Peter Barrett - Kutak Rock LLP; Richmond, VA
  • Scott Cohen - Engelman Berger, PC; Phoenix
  • Peter Roberts - Fox Rothschild LLP, Chicago
  • Cynthia Romano - CR3 Partners LLC, New York

Volo

 
 
 
 
abiLIVE webinar 4/24/19
 
 
 
Eye on Bankruptcy 3/28/19
 
 
 
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