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Vol 13, Num 1 l May 2016

Asset Sales

► In This Issue:

Energy Assets: Are They Worth the Balance Sheets They Are Written On?

Sharon Kopman
GA Global Partners
Woodland Hills, Calif.

We know 2015 was a bleak year for coal, oil and natural gas producers, with at least 67 bankruptcy filings. 2016 is not looking much better. Surpluses of coal, oil and natural gas continue to weigh down prices and threaten companies’ balance sheets. Revenues have dropped, choking off cash flows and making it challenging for companies to pay off their debt. Several large energy gas producers have filed for bankruptcy since the beginning of 2016, and almost weekly we see companies that, despite cutting jobs and slashing spending, cannot continue to wait for a turnaround.

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GM Second Circuit Appellate Briefing on Appeal of Bankruptcy Court Successor Liability/Due Process Decision


John B. Hutton
Greenberg Traurig, LLP


Henry Jaffe
Pepper Hamilton LLP
Wilmington, Del.

One of the most significant benefits of acquiring assets out of a bankruptcy estate is the ability to obtain those assets free and clear of liens, claims, interests and encumbrances, pursuant to § 363 of the Bankruptcy Code and the terms of a bankruptcy court sale order. In certain circuits, including the Second Circuit, the term “interests” includes not only in rem interests, but in personam interests as well, such as successor liability claims. The GM case does not challenge the underlying notion in the Second Circuit that § 363 sales can be authorized free and clear of successor liability claims; rather, the GM litigation on successor liability presents the issue of the extent to which a sale order can be enforced against parties who did not receive direct “actual” notice of the sale. The appeal arises as a result of the Decision on Motion to Enforce Sale Order entered by Judge Gerber in the GM case on April 15, 2015 (the “bankruptcy court decision” or BCD). The BCD is now on appeal and has been briefed in the Second Circuit, with oral argument having been conducted on March 15, 2016.

The BCD concerns the rights of two general groups of claimants that were allegedly harmed by a failure of GM to provide them with actual notice of certain critical deadlines in the GM case, including (a) notice of the expedited § 363 sale in the GM case and (b) notice of the proof of claim bar date.

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In re Family Christian: Michigan Bankruptcy Court Holds § 503(b)(9) Claims Are “Freight” that Must Be Paid in 363 Asset Sale


Paul J. Labov
Fox Rothschild, LLP
New York


Audrey Noll
Fox Rothschild, LLP
Las Vegas

In June 2015, Bankruptcy Judge John T. Gregg ruled in In re Family Christian that all administrative priority claims, including those arising under § 503(b)(9), must be paid as part of the price of a § 363 sale of the debtor’s assets.

Factual Background
The debtors in Family Christian operated one of the largest chains of Christian retail bookstores, with over 280 stores in 36 states and annual sales exceeding $200 million. Their assets were valued at about $28 million against secured debt totaling about $58 million. Administrative priority claims totaled about $14 million, $5.6 million of which were § 503(b)(9) claims.

The assets went to auction, which resulted in three disparate bids: The first bid guaranteed payment of all administrative priority claims in full; the second bid made no payment guarantee as to administrative priority claims; and the third bid guaranteed payment of only certain administrative priority claims (explicitly excluding § 503(b)(9) claims).

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NOW ONLINERecording of Annual Spring Meeting Committee Session Available

ASM 16 Asset Sales Committee SessionThe Asset Sales and Labor & Employment Committees recently paired at the Annual Spring Meeting in Washington, D.C. at the J.W. Marriott to present a session titled “Labor Issues in 363 Sales: Things you Need to Know.” The panel for this session featured Scott K. Brown (Lewis Roca Rothgerber Christie LLP; Phoenix); Michael P. Horan (Trenam Law; St. Petersburg, Fla.); James M. Lukenda (Huron Consulting Group; New York); and Lucian B. Murley (Saul Ewing LLP; Wilmington, Del.). Materials for this session can be found online.

Click here to access the educational session recording.

Now Available at the ABI Bookstore: When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy

When Gushers Go Dry 2nd Ed.

When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy, Second Edition offers an expanded discussion on the various players in the oil and gas industry, including new developments in financing and the treatment of oil and gas-related agreements. This second edition provides practitioners with a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt, presenting in detail the issues that are specific to this highly specialized industry.

Click here to read a sample chapter.

Click here to view Bill Rochelle’s “Quick Take” with author Deborah D. Williamson at the 2016 Annual Spring Meeting.

23rd Annual Central States Bankruptcy Workshop


Southeast Bankruptcy Workshop

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