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Abstract: 

As the economy recovers from the lingering financial crisis, lenders that in the last several years had few options with respect to distressed borrowers are now finding a robust market for the sale of going-concern companies. Private equity funds are under pressure to invest their capital and financial institutions and other lenders are aggressively competing for loans. In this environment, the constituent parties frequently utilize the protections of a federal insolvency proceeding to market and convey businesses. The business assets are transferred as ongoing concerns free and clear of liens, claims, and encumbrances, thereby restructuring the target’s balance sheet while reducing the risk of trailing liabilities which burden traditional asset purchases. This article provides an outline of the process followed in Chapter 11 bankruptcy cases, and highlights key issues involved.

Keywords: Chapter 11 bankruptcy; Section 363 sale; sale out of the ordinary course of business; stalking horse bidder; break-up fee; bid procedures

Affiliations:  1: Reinhart Boerner Van Deuren; 2: Reinhart Boerner Van Deuren; 3: Reinhart Boerner Van Deuren.