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Vol 12, Num 1 l July 2015

Asset Sales

► In This Issue:

A Letter From Your Co-Chairs

Franklind D. Lea
Tactical Financial
Consulting, LLC

Atlanta

Bradley D. Sharp
Development Specialists, Inc.
Los Angeles

Post-Annual Spring Meeting is a time of change for ABI, including our committee's leadership! The term of John Hutton, our co-chair for the past several years, has ended, and Brad Sharp has been named as a new co-chair. Shaunna Jones has become our Newsletter Editor. To date, the Listserve Facilitator position remains open. If you are interested in joining the leadership team by filling this role, please email us. We thank those departing leaders who have served us well, and welcome aboard our new committee leaders.

Speaking of the Annual Spring Meeting, the Asset Committee paired with the Real Estate Committee at the conference and put on an excellent program called, “Don’t Restrict My Sale: The Enforceability of Restrictive Covenants and Easements in Asset Sales in Bankruptcy.” It was an outstanding program, with Judge Catherine McEwen as moderator (and creator of some interesting and thought-provoking hypotheticals), and Alec Ostrow, Gregg Hesse and Michael Sirota as panelists/proponents of different positions, pro and con. The program largely centered on the consideration of some hypotheticals (with visual layouts of different hypothetical cases), with each of the panelists taking a position. Alec argued the estate position, asserting arguments that an estate might advocate in favor of selling free and clear of a deed restriction or covenant (hint: Section 363(f)(4) looms large, as might state law notions of abandonment and unreasonable restraints on alienation). Gregg and Michael argued the position of those advocating enforcement and recognition of the restrictions, covenants and licenses (boo, hiss). The interactive format fostered considerable audience participation, and was well received.
» Read More

Interpreting Plurality Decisions: Fracking, Supreme Court Style

ABI

Franklind D. Lea
Tactical Financial
Consulting, LLC

Atlanta

Fracking, shorthand for hydraulic fracturing, is a type of drilling used by oil and gas prospectors. It involves drilling thousands of feet below the surface before gradually turning horizontal and continuing onward. As a result, an initially unsuccessful drilling site can give rise to several unique wells. Similarly, it is possible that a case that is unsuccessful at generating a unanimous decision may also present various twists and turns by a group of appellate judges, which can give rise to several unique opinions.

When judges do not unanimously agree, they often write their own opinions explaining their reasoning and dissenting or concurring with parts of the other opinions. At times, however, no single opinion enjoys the support of the majority of judges.
» Read More

Using Sale Orders to Block Post-Sale Claims

ABI

Lauren A. Lipari
Hughes Hubbard & Reed LLP
New York

Under § 363 of the Bankruptcy Code, a trustee or debtor in possession may sell property “free and clear of any interest in such property of an entity other than the estate” if certain conditions are met. That property may be sold “free and clear of any interest” has the effect of blocking post-sale claims against the purchaser, as “principles underlying the finality of 363 sale orders” are considered “much too important” for a court to otherwise deny full enforcement.

A recent decision from the U.S. Bankruptcy Court for the Southern District of New York exemplifies how the finality of sale orders can be used to block post-sale claims against a purchaser.
» Read More

New and Improved! ABI’s Committee Website has Moved

You may have noticed a few changes to the committee site over the last week, including a new location. The committees' webpages have now been integrated into the main ABI website. To access these new pages, simply visit abi.org, hover over the "Membership" tab, and click on "Committees." Here, you will be able to access newsletter articles, recent recordings, announcements, listserve activity and contact information for your leadership team.

Not sure of what committees you are a member? Update your profile, select the "Committees" tab and use the check boxes to update your status. While you're here, take a few moments to update your full preferences, including CLE and bar information, contact information, title, and more. Uploading a professional photo is also a great way to make yourself more visible in the directory. Not only will your photo be included in the directory, but ABI staff will also have it available for use with any future article or speaking bylines.

Have comments, questions or concerns? Email us through our new support system: support@abi.org.

Did You Miss the Asset Sales Committee’s Oil & Gas Webinar?

The recording is now available online!

As a result of falling energy prices, experts expect bankruptcy filings in the energy sector to increase, especially those in the oil and gas industry. Bankruptcy cases involving energy companies raise unique issues due to the interplay among the Bankruptcy Code, federal and state laws, the regulatory structure governing the energy industry, and the political and practical realities of the industry’s significance on national, regional and local levels. This webinar explored the unique challenges that can arise in a § 363 sale of the assets of a business involved in the energy industry, with a particular emphasis on oil and gas bankruptcies.

Available from the ABI Bookstore—Credit-Bidding in Bankruptcy Sales: A Guide for Lenders, Creditors, and Distressed-Debt Investors

Credit-Bidding Book
By Paul R. Hage,
Brian M. Resnick
and Brent Weisenberg

Although credit bidding—in which the secured creditor can credit bid the amount of its allowed claim in any sale of its collateral by its debtor—is acknowledged as being an important part of the secured creditor’s bundle of rights, some argue that in certain circumstances credit bidding can chill bidding or otherwise prevent the debtor from maximizing the value of its assets.

Credit Bidding in Bankruptcy Sales details how the courts have handled this debate, with reference to specific cases such as Fisker and Free Lance-Star, and also provides practitioners with the information that they need to know when reviewing credit agreements, debtor in possession financing orders and sale orders related to credit bidding. When, and to what extent, is credit bidding allowed? How might a credit bid be submitted in a bankruptcy sale? The book also includes an in-depth analysis of how credit bidding affects professional fees.

ABILive: Recommendations on Professional Fees & Expenses

 

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