Equity Partners Inc.; Easton, Md.
Historically, a credit bid in a chapter 11 asset sale pursuant to 11 U.S.C. §363 has frequently been viewed as a "nonsale" event, and the creditors of the debtor-in-possession (DIP) did not feel an obligation to pay an investment banker, business broker, real estate broker or auctioneer (the professional) a commission and/or fee for that result. For one thing, the professional's employment agreement frequently calls for payment "from the sale proceeds," and there are no cash proceeds from which to pay in the event of a credit bid. Additionally, the employment agreement is usually between the DIP and the professional. Unfortunately for the professional, without access to cash sale proceeds, the DIP usually will not have any money with which to pay a commission and/or fee. Furthermore, it may sometimes be difficult to prove a benefit to the estate derived from a credit bid. As a result, a professional can do a lot of work, with no assurance of any compensation, and/or have to rely on the surcharge provisions of 11 U.S.C. §506(c).
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CONSOR Intellectual Asset Management; La Jolla, Calif.
PART I
In virtually every bankruptcy situation today, the question of intellectual property-identifying, valuing and disposing of-has become of serious importance. We provide an overview of how to identify intellectual property (IP) and intangible assets and how to group those components into bundles of discreet value.
It is useful to review some of the most important questions one faces when sorting through the issues surrounding technology, IT, patents, trademarks, brands and other intangibles, collectively grouped together as IP.
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LeClairRyan, A Professional Corporation; New Haven, Conn.
In late August 2008, Judge Allan L. Gropper authorized the debtors in the Steve & Barry's retail chapter 11 cases to sell substantially all of their assets (the sale) to BH S&B Holdings LLC, (BH S&B), including scores of real property leases and designation rights for dozens of other real property leases. In re Steve & Barry's Manhattan LLC, Case No. 08-12579-ALG, Docket No. 628 (Bankr. S.D.N.Y. Nov. 24, 2008). BH S&B is a special-purpose entity that was formed by investment firm Bay Harbour Management to be the "purchaser" of Steve & Barry's assets. The sale order authorized a joint venture of two well-known liquidation companies, Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC (the liquidator), to conduct going out of business (GOB) sales at hundreds of the Steve & Barry's leased locations. Pursuant to the sale order and the asset-purchase agreement (APA), the purchaser had the obligation to pay all expenses associated with the GOB sales, including rent at the locations where lease designation rights had been sold to the purchaser. The APA also contemplated an escrow account and other means of giving the debtors, court, landlords and other parties in interest the comfort that the purchaser would meet its obligations created by the sale. Almost immediately after entry of the sale order, the liquidator began conducting the GOB sales and the proceeds of those sales began flowing through Steve & Barry's accounts.
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Submit Articles for the ABI Asset Sales Committee Newsletter
Article submissions are always welcome and are a great way to get involved in the ABI when you don't have time to draft an in-depth lengthy article. Short articles (about 1,200 words) can survey the law nationally or locally, discuss relevant asset sale issues or examine a specific case. If you are interested in writing, contact Newsletter Editor John Maddock at jmaddock@mcguirewoods.com. The next deadline is March 12, 2009.
