by: Jeffrey M. Carbino
Thorp Reed & Armstrong; Philadelphia
Asset sales of substantially all of the assets of a corporate debtor early in a chapter 11 case have become routine. Orders approving motions to approve streamlined procedures for sales of de minimis assets in large chapter 11 cases have also become routine. In re Borders Group, Inc. [1] addressed the tension that arises from the understandable desire of debtors to maximize efficiency and expediency in sales of de minimis assets free and clear of liens, claims and encumbrances against the competing desire of buyers for assurance that their purchases are not subject to later attack.
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Picture the typical bankruptcy case. The decision is made to sell the assets, and debtor’s counsel drafts bidding procedures to create a framework to generate the highest and best bid for a particular estate asset. The committee and the secured creditors make comments and the court approves the bidding procedures. Potential purchasers review the bidding procedures and line up to make their bids. Auction day arrives, bidding begins and subsequently ends with the naming of the successful bidder. Next stop: court approval. But wait! A late bid has been received, offering to pay more than the successful bidder. At the hearing, debtor’s counsel informs the court that a losing bidder has now offered more money than the successful bidder. The secured creditor and the committee ask the court to consider the last-minute bid.
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by: George R. Mesires
Ungaretti & Harris LLP; Chicago
On June 28, 2011, the U.S. Court of Appeals for the Seventh Circuit affirmed the U.S. Bankruptcy Court of the Northern District of Illinois’ decision and held that a secured creditor has a statutory right to credit-bid its debt in the sale of assets proposed under a nonconsensual reorganization plan pursuant to § 1129(b)(2)(A) of the Bankruptcy Code. [1] The River Road case is significant for at least two reasons.
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ABI's Asset Sales Databank (http://363.abi.org/) is a growing database of orders approving asset sales procedures from bankruptcy courts across the country in summary form. The data is organized by judicial circuit and is searchable by district, size of the transaction, or the key terms of the sale. We believe that this is the first publicly available website of its kind, which will prove to be a valuable resource to practitioners.
We need your help! The site is growing rapidly; however, with the explosion of asset sales in the recent wave of bankruptcies, there are many more sales to summarize and upload to the site. ABI is soliciting volunteers who would like to serve on the Editorial Board and be responsible for summarizing recent asset sales. If you would like to serve on the site's Editorial Board, please contact Ira Herman at Ira.Herman@tklaw.com. Alternatively, any registered user of the site can submit a case for consideration by clicking on the “Submit Case” tab in the menu after registering with the site. Once reviewed by the Editorial Board, the case will be added to the databank.
