Ocean-Front Property in Montana and Other Shrewd Purchases

08/05/2003

Introduction

Good businesses with too much debt that must reorganize and restructure present significant opportunities for investors.  The bankruptcy courts have become more receptive to traditional acquisition techniques that make investing more efficient, including blind auctions, the use of customary acquisition agreements, the use of professional financial advisers, and the payment of “break-up” fees.  In addition, the purchase of debt or claims, which is the troubled debtor equivalent of a hostile tender offer, has emerged as a controversial tactic to gain control of the reorganization process.  In light of the foregoing, reorganizing and restructuring have become more attractive than ever to those in a position to capitalize on the opportunities presented.

One of the most important developments in Chapter 11 practice over the past ten years has been the dramatic increase in sales of assets pursuant to section 363 of the Bankruptcy Code. Many of these sales involve parts of the debtor’s business, while others involve the debtor’s entire business.  Anecdotal evidence suggests that section 363 has eclipsed section 1129 in the context of asset sales in bankruptcy.   This paper will address many facets of sales of assets pursuant to section 363.

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