Section 363 Bankruptcy Sales: Key Considerations in the Auction Process, Private Sales, Due Diligence, and Operations
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Bankruptcy
- event Date
Wednesday, May 26, 2021
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will examine Section 363 sales, with particular focus on key issues that can impact the rights and obligations of parties in interest before, during, and after an auction or private sale.
Mr. Reynolds is a corporate restructuring lawyer who represents major constituencies involved in distressed transactions. This includes companies both in and out of bankruptcy, as well as unsecured creditors' committees and other major stakeholders.
Mr. Wearsch advises clients on strategic alternatives when faced with troubled company situations. Focusing on distressed as well as healthy companies, financial institutions, equity and hedge funds, bondholders, committees, boards, and management, he has served as counsel to numerous corporations involved in chapter 11 reorganizations, out-of-court restructurings, and distressed mergers and acquisitions. Mr. Wearsch's practice has exposed him to a number of industries including automotive, aerospace, manufacturing, health care, energy, hospitality, securities, mining, media, and technology.
Mr. Wilson advises corporate, financial, and municipal clients in insolvency and restructuring situations across a variety of industries. These industries include automotive, mining, gaming, energy, retail, manufacturing, and financial services, with particular experience in municipal bankruptcy and the liquidation of complex corporate enterprises. Mr. Wilson played a key role in the successful resolution in the historic chapter 9 case of the City of Detroit, Michigan. He regularly counsels clients in all aspects of bankruptcy and restructuring matters, including distressed asset transactions, supplier issues, fraudulent conveyance, preference and fiduciary duty actions, environmental and mass tort liability, post-petition financing, and jurisdictional issues arising in bankruptcy. Mr. Wilson's clients span the spectrum of interested parties in restructuring matters, including debtors and potential debtors, prepetition secured creditors, creditors' committees, parents of insolvent subsidiaries, avoidance actions defendants, and sellers and purchasers of assets.
Section 363 of the Bankruptcy Code provides an attractive way for purchasers to acquire assets. These sales are accompanied by a bankruptcy court order that provides the asset transfer clear of liens, claims, and encumbrances and, in some instances, may provide a purchaser with additional protections. Buyers are often willing to pay a premium for these protections; however, there are many exceptions. Distressed investing professionals and counsel must appreciate the potential pitfalls of Section 363 sales.
This program will discuss a Section 363 sale from beginning to end. Our speakers will examine, among other things, (1) the importance of pre-bankruptcy sale efforts; (2) bidding procedures, which establish a road map for the sale of a debtor's assets; (3) proper diligence procedures; and (4) the pros and cons of so-called "stalking-horse bidders," break-up fees, and expense reimbursements.
Other topics our speakers will address include attacks on so-called "credit bidding," including efforts to cap a bidder's currency, potential sale structures to get auction proceeds to constituencies that the debtor and buyer need to approve the sale (e.g., a creditors committee), while "skipping" administrative claim holders, when the highest bid may not be the winning bid, and other important developments that have arisen in Section 363 sales.
Listen as our panel of experienced bankruptcy practitioners discusses the nuances of this powerful and prevalent bankruptcy tool. Our panel will review how to re-open bidding after it has closed, who has judicial standing to move to re-open a sale, successor liability issues of which purchasers (and even debtors) may be unaware, and best practices to avoid accusations of collusion. The panel will also outline how to operate a business in the days right after closing, including licensing issues, transition services agreements, and management agreements.
- Section 363 requirements generally: when an auction vs. a private sale is appropriate
- The stalking-horse bid
- Break-up fee and expense reimbursement
- Super-priority administrative expense, carve-out
- The bankruptcy sale efforts--publication, actual notice to parties-in-interest
- Due diligence: reasonable period before bid, access to documents
- Successor liability
- Executory contracts and unexpired leases
- Attacks on credit bidding
- How to close the sale
- Operating the business post-sale
- The future of Section 363 sales
The panel will review these and other key issues:
- What role does the stalking-horse bidder have in formulating the bidding process, and what are its primary concerns?
- What notice and due diligence rights should bidders want to see in the bidding procedures?
- What process should be followed for accepting and distributing qualified bids?
- How can a bidder ensure it has the flexibility to accept or reject executory contracts and unexpired leases upon closing of a 363 sale?
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