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90 Second Lesson: First Step When Purchasing a Distressed Business

Editors’ Note: this is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to info@dailydac.com and we will try to answer it.

90 Second Lesson: Purchasing a Distressed Business

QUESTION:

What is the first integral decision a potential purchaser of a distressed business must make?

ANSWER:

Assuming that the seller has not already decided on the mechanism for the sale, the first choice confronting the potential purchaser of a distressed business is how the sale should be effected. The four basic choices are an ordinary stock/asset purchase, an assignment for the benefit of creditors (ABC), an Article 9 purchase, or a bankruptcy acquisition. Each offers different advantages and disadvantages.

You can explore further by reading David K. Bowsher here. Likewise, you can explore related topics through the links below:

Buying Operating Assets from an Insolvent Seller

Purchasing Real Property in a Section 363 Sale

The Myth of Newspaper Notice as Being Commercially Reasonable

Note: This 90 Second Lesson is based, in substantial part, in material reprinted from Commercial Bankruptcy Litigation 2d and Strategic Alternatives for and Against Distressed Businesses, with permission of Thomson Reuters. For more information about these publications, please visit www.legalsolutions.com.

About The DailyDAC Editors

The editors and editorial board of DailyDAC include preeminent restructuring and insolvency professionals, journalists, and editors. They are devoted to providing reliable and plain English education and deal intelligence about assignments, corporate bankruptcy, receiverships, out-of-court workouts an similar topics.

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