Section 363(f) Five Statutory Ground

Section 363(f) Five Statutory Grounds refers to the five alternative statutory bases under Section 363(f) of the Bankruptcy Code that can permit property of a bankruptcy estate to be sold free and clear of another party’s interest in that property. Only one of the five grounds needs to apply.

A sale may qualify when:

1. Applicable nonbankruptcy law permits the transfer. The property may be sold without the asserted interest when law outside the Bankruptcy Code allows that result.
2. The interest holder consents. The party holding the lien, claim, or other interest agrees to the proposed treatment of its interest in connection with the sale.
3. The statutory condition applicable to liens is met. When the asserted interest is a lien, Section 363(f)(3) provides a separate basis for relief tied to the relationship between the sale price and the value of liens against the property.
4. The asserted interest is genuinely disputed. Section 363(f)(4) may apply when there is a bona fide dispute concerning the validity or existence of the interest asserted against the property.
5. The interest can be satisfied monetarily through another proceeding. Section 363(f)(5) addresses circumstances in which the holder could be compelled, through a legal or equitable process, to receive money in satisfaction of the interest rather than continue to assert that interest against the property.

The five grounds are alternatives rather than cumulative requirements. Accordingly, a debtor or trustee seeking authority for a free-and-clear sale does not ordinarily need to establish all five. The applicable ground and the treatment of the affected interest should be addressed in the sale motion and ultimately reflected in the court’s sale order.