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Vol 12, Num 2 l September 2015

Asset Sales

► In This Issue:

Case Law on 363 Sales Continues to Evolve

Bobby Guy
Polsinelli P.C.
Nashville, Tenn.

Over the past two decades, chapter 11 has become the favored forum for the sale of distressed companies in the U.S. Section 363 of the U.S. Bankruptcy Code is a strong tool for maximizing the value of struggling companies and providing predictability in distress sales.

Where there is much commercial activity, there is usually also much evolution in the law. The law surrounding 363 sales is no exception, and over the past several years there have been a number of decisions that have significant implications for the outcome of distress sales.
» Read More

In re Family Christian: A Reminder to Practitioners of Factors to Consider When Evaluating Multiple Offers in Section 363 Sales


Ji Hun Kim
Willkie Farr & Gallagher LLP
New York


Christopher S. Koenig
Willkie Farr & Gallagher LLP
New York

Section 363 sales are a common vehicle for a debtor and its creditors to receive fair value for the debtor’s assets through an open auction process supervised by the bankruptcy court. An open auction process is designed to generate a number of competitive offers for the debtor’s assets. A debtor in possession has a fiduciary duty to its stakeholders to maximize the value of its estate when selling assets pursuant to § 363 of the Bankruptcy Code. However, that fiduciary duty to maximize value from a sale is not satisfied simply by conducting an arithmetic task of picking the highest sale price from multiple offers; rather, there are other pertinent factors that have a significant effect on value that need to be considered, as illustrated by a recent bankruptcy court decision from the Western District of Michigan.

In In re Family Christian, Case No. 15-643 (JFG) [Docket No. 931] (Bankr. W.D. Mich. June 18, 2015), the bankruptcy court issued a memorandum opinion (the “Family Christian Opinion”) denying the debtors’ motion to sell substantially all its assets to an insider, FCS Acquisition, LLC (“Acquisition”) because (1) the debtors failed to properly consider and value a number of factors other than the sale price, such as the value of avoidance actions and insider releases proposed to be sold in the purchase agreement, and (2) the debtors failed to establish the good faith of Acquisition, the insider purchaser. Since the proposed sale would benefit an insider of the debtor, the court also applied heightened scrutiny to the sale transaction.
» Read More

Asset Sales Committee Webinar Review: Oil & Gas Issues


Ira L. Herman
Thompson & Knight LLP
New York

On June 16, 2015, the Asset Sales Committee sponsored a webinar titled Buying and Selling Oil & Gas Assets in Bankruptcy Cases. The presentation, by Thompson & Knight Partner Ira L. Herman, Greenberg Traurig Shareholder Shari Heyen and Conway MacKenzie Managing Director Bryan M. Gaston, is available in ABI’s CLE Center.

The program opened with a discussion of the Bankruptcy Code provisions normally considered when oil and gas assets are “in play” in a bankruptcy case. This part of the presentation was followed by an in-depth discussion of the specialized due diligence concerns associated with the purchase and sale of upstream energy (oil and gas) assets. Such specialized due diligence, we learned, generally falls into one of two categories.
» Read More

NEWSnazzy New Website Available for the 27th Annual Winter Leadership Conference

ABI has launched a new website and registration page for this year’s Winter Leadership Conference! Join us Dec. 3-5, 2015, at the historic Arizona Biltmore in downtown Phoenix for CLE, networking and breath-taking views. Offering up to 12/14 hours of CLE/CPE credit and 2.75/3 hours of ethics, there are a variety of sessions with topnotch speakers for consumer and business practitioners, as well as financial advisors.

Included in this year’s schedule is the Asset Sales and Bankruptcy Taxation committees’ joint session titled Selling Unusual Assets in Bankruptcy and their Tax Aspects (Pot, Porn and Puppies). Scheduled for Friday, from 3:45 am – 5:00 pm, speakers for this session include Vernon Calder (Berkeley Research Group, LLC; Salt Lake City), Maria Ellena Chavez-Ruark (Saul Ewing LLP; Baltimore) S. Gregory Hays (Hays Financial Consulting, LLC; Atlanta), and Gary A. Norton (Whitfield & Eddy, P.L.C.; Des Moines, IA).

NEW Highlights from the conference include:

  • Optional events, including a golf tournament, kayaking, tennis, horseback riding and much more
  • Great Debates on chapter 11 plans, whether a bankruptcy judge can disband a creditors’ committee and must a creditor file a proof of claim
  • BAPCPA Consumer Issues: 10-Year Anniversary Special
  • Nine joint committee sessions, provided by ABI’s 18 committees
  • A live Bloomberg “Eye on Bankruptcy” luncheon presentation
  • A special Casino Night!
  • A judges’ roundtable on hot-button issues
Early-bird registration ends Oct. 2, so be sure to register to take advantage of the savings.
Credit-Bidding Book

Pick up a copy of Credit Bidding in Bankruptcy Sales, available now in the ABI bookstore, which 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.

41st Annual Lawrence P. King & Charles Seligson Workshop on Bankruptcy & Business Reorganization


20th Views from the Bench - Georgetown Law Center 10/09/15

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