Purchases and Sales

Section 363 Sales


November 7, 2016
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Limiting Credit Bidding “For Cause” After In re Aeropostale

Lucas S. Smith
Student
University of Tennessee College of Law
lucas.s.smith@gmail.com


Section 363(k) of the Bankruptcy Code (the “Code”) allows a secured creditor to bid at a section 363 sale and use the amount of their claim to offset the purchase price at the sale, called “credit bidding.”[2]   A court may limit this right “for cause.”[3]  The “for cause” standard is not defined in the Code and disagreement exists as to what constitutes “for cause.” Traditional bases for limiting credit bidding include challenges related to the...

September 19, 2016
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Litigation Funder Monetizes Portion of Fraudulent Transfer Judgment in Cutting-Edge Transaction

Christopher B. Wick
Hahn Loeser & Parks, LLP
200 Public Square Suite 2800
Cleveland, OH 44114
(216) 274-2489
cwick@hahnlaw.com

http://www.hahnlaw.com/


Gerchen Keller purchases a portion of the interest in proceeds of $213 million fraudulent conveyance judgment in innovative public sale. An interesting transaction took place on September 8, 2016. The chapter 7 bankruptcy trustee for Magnesium Corporation of America (“MagCorp”) sold a $50 million share of a $213 million judgment it has against fraudulent conveyance transferee, Renco Group Inc. and former MagCorp owner, Ira Rennert. The buyer, Gerchen Keller Capital LLC paid $26.2 million transaction...

May 29, 2015
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Auction for Frederick’s of Hollywood Assets Cancelled After No Bids Received

Breaking News Alerts from Chapter11Dockets.com


Frederick’s of Hollywood, which filed for bankruptcy last month after closing all of its stores, has announced that it was unsuccessful in generating additional bids to acquire its assets.  The deadline for parties to submit bids was May 25, 2015 at 5:00 p.m. (Eastern Daylight Time).  Because no competing bids were received, the auction that had been scheduled for May 28, 2015 at 10:00 a.m. (Eastern Daylight Time) has been cancelled.  Instead, Frederick's of Hollywood will seek...

May 27, 2015
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Family Christian Reports Results of Auction for Sale of All its Assets

Breaking News Alerts from Chapter11Dockets.com


Family Christian, the large chain of retail stores focusing on religious products, announced the results of the auction for the sale of substantially all of its assets.  The auction, which is part of a sale process being undertaken pursuant to section 363 of the Bankruptcy Code and under supervision of the United States Bankruptcy Court for the Western District of Michigan, commenced on May 21, 2015 but did not conclude until May 27, 2015. According...

May 25, 2015
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IMRIS Inc. Makes Memorial Day Bankruptcy Filing

Breaking News Alerts from Chapter11Dockets.com


While most investors were enjoying the Memorial Day holiday, medical technology company IMRIS Inc. and its affiliates were filing for bankruptcy protection in Delaware.  The companies, which trade on the Toronto Stock Exchange under the symbol “IM” and on the NASDAQ Global Markets Exchange under “IMRS,” described the troubles leading to Monday's bankruptcy filings: As with many medical device companies, IMRIS has had numerous hurdles to achieving financial success, which are often not necessarily linked to the enormous...

May 19, 2015
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American Eagle Energy Plans Asset Sale After Bankruptcy Filing

Breaking News Alerts from Chapter11Dockets.com


American Eagle Energy Corporation (NYSE: AMZGQ), which filed for chapter 11 bankruptcy protection in Denver on May 8, 2015, is now seeking approval for procedures to sell substantially all of its assets.  According to the motion filed with the bankruptcy court, the asset sale is supported by an ad hoc group of holders of the 11.0% Senior Secured Notes due 2019 issued by American Eagle Energy Corp. and guaranteed by its affiliate AMZG, Inc., which also filed for bankruptcy...

May 12, 2015
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Fresh Produce Holdings Reports on Results of Bankruptcy Asset Sale Auction

Breaking News Alerts from Chapter11Dockets.com


Fresh Produce Holdings, which operates the Fresh Produce Clothes chain of retail stores, has disclosed the results of an auction that it held to sell all or a portion of its assets.  The company filed for bankruptcy protection in early April 2015 and obtained bankruptcy court approval to undertake a process to sell its assets earlier this month.  According to the auction report filed with the bankruptcy court, the winning bidder at the auction was...

April 30, 2015
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Endeavour Operating Corp. Abandons Proposed Plan of Reorganization, Seeks Sale

Breaking News Alerts from Chapter11Dockets.com


Endeavour Operating Corp., which filed for bankruptcy protection last October with a pre-negotiated plan to restructure pursuant to a Plan of Reorganization, revealed in bankruptcy court filings that it is abandoning that pre-negotiated plan and will now seek a bankruptcy court asset sale.  In the motion seeking approval of sale procedures, the company explained its situation: On October 10, 2014, prior to filing the Debtors’ chapter 11 cases, the Debtors entered into an agreement (the “Restructuring...

April 17, 2015
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The Rumors of Kanye West Buying Karmaloop Have Been Greatly Exaggerated

Jon Petersen
Distressed Debt/Equities Research Team
jpetersen@dailydac.com


There has been a lot of hot air blown in the past couple of weeks regarding Kanye West and Dame Dash being interested in buying the troubled e-commerce retailer Karmaloop. The two made a series of Instagram posts where they described with some bluster how they were purchasing the company. "We just about to do some new shit, you know, stick together culturally -- take over the world and create a whole new industry and...

April 7, 2015
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Not Necessarily Free and Clear IV: RECOMMENDED READING on Antitrust Exposure of Purchaser of Assets From 363 Sale by Direct Competitor

From the Editorial Staff of Commercial Bankruptcy Investor


Buying the assets of a competitor out of a section 363 bankruptcy sale?  This site has explained here and here how section 363(f) of the Bankruptcy Code empowers a court to order that assets sold under section 363(b) of the Code are, in the hands of the purchaser, “free and clear” of any “interests” in the property that may have existed while it was in the hands of the debtor (or to have inured at any time prior...

March 18, 2015
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Salus Capital Seeks to Limit Credit Bidding Rights in RadioShack's Bankruptcy

Breaking News Alerts from Chapter11Dockets.com


As we reported yesterday on sister site Commercial Bankruptcy Litigation, one of RadioShack's lenders (Salus Capital Partners) filed an adversary complaint against other of RadioShack's lenders.  Today, the other shoe dropped as Salus filed a motion in RadioShack's Chapter 11 bankruptcy cases asking the bankruptcy court to limit those lenders' right to credit bid their claims in sales of RadioShack's assets.  In the motion, Salus, acting as the agent for lenders referred to as the...

March 5, 2015
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SEC Discloses Investigation of Xhibit Corp. in Objection to SkyMall Bankruptcy Sale

Breaking News Alerts from Chapter11Dockets.com


In an objection to the bankruptcy court sale of certain (but strangely somewhat undefined) assets of SkyMall, the U.S. Securities and Exchange Commission made a public acknowledgement of a heretofore non-public investigation of SkyMall's publicly-traded parent company. In the objection, a copy of which is available here, the SEC discloses that it "has issued an investigative subpoena to Xhibit Corp. requiring it to produce documents and records of Xhibit and its affiliates and subsidiaries (including...

February 11, 2015
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Not Necessarily Free and Clear III: Imposing Debtor’s Unemployment Insurance Ratings Onto Purchaser?

Jon Petersen
Distressed Debt/Equities Research Team
jpetersen@dailydac.com


On April 30, 2009, Chrysler and 25 of its direct and indirect subsidiaries (collectively, “Old Chrysler”) commenced bankruptcy cases that became jointly administered.[i] Scarcely a month later, Old Chrysler sold its assets through a sale under section 363 of the Bankruptcy Code to a newly-formed entity that went on to do business as Chrysler (“New Chrysler”). As discussed in a previous article, a section 363 sale allows a purchaser to take the assets free and...

February 10, 2015
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Atlantic City's Revel Hotel & Casino Sale Falls Apart for the Second Time

Breaking News Alerts from Chapter11Dockets.com


A new chapter in the long novel of the struggles of the Revel Hotel & Casino in Atlantic City, New Jersey began this morning.  In a court filing (copy available here), the bankrupt hotelier asked the New Jersey bankruptcy court for authority to terminate its agreement to sell its assets to Glenn Straub's Polo North Country Club, Inc. and keep Polo North's $10 million deposit.  Prior to the Polo North deal, Revel had an agreement to...

February 10, 2015
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What Does RadioShack's Bankruptcy Mean for Creditors & Shareholders?

Breaking News Alerts from Chapter11Dockets.com


One of the fundamental questions - perhaps the most fundamental question - for creditors and shareholders following a company's bankruptcy filing is "what does this mean for me?"  RadioShack Corporation and a number of affiliates filed for bankruptcy protection last week with plans to sell some of their operations and liquidate the rest.  It is, at present, challenging to put an exact dollar figure on either portion of that plan in terms of the amount...

January 23, 2015
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Not Necessarily Free and Clear II: Successor Liability in General Motors

Jon Petersen
Distressed Debt/Equities Research Team
jpetersen@dailydac.com


The scene is Detroit, and the time is early 2009. General Motors is in a pickle. Years of multi-billion dollar losses and mounting pension obligations have taken their toll on GM, and it is looking in to filing a chapter 11 bankruptcy as a means of becoming solvent once again. By June, the U.S. Government will approve bankruptcy proceedings (In re General Motors, 407 B.R. 463, 503-04), and the creation of a completely new entity,...

January 20, 2015
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Versa Capital Management Submits Competing Offer to Be Plan Sponsor & DIP Lender for The Wet Seal, Inc.

Breaking News Alerts from Chapter11Dockets.com


In a Monday bankruptcy court filing, Versa Capital Management, LLC disclosed that it has submitted an offer to both (1) provide debtor-in-possession financing to and (2) sponsor a plan of reorganization for The Wet Seal, Inc.  A copy of the January 19, 2015 letter from Versa Capital Management's Chairman & CEO Gregory L. Segall to Wet Seal's Board of Directors and President/CEO can be viewed by clicking here.  The objection to which the letter was attached...

January 5, 2015
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Registered Investment Adviser NSB Advisors LLC Files for Chapter 11 Bankruptcy Protection in New York

Breaking News Alerts from Chapter11Dockets.com


The Southern District of New York's second Chapter 11 bankruptcy filing of 2015 was made today by NSB Advisors LLC of Fishkill, New York.  The registered investment adviser founded in 2009 by William F. Nicklin claims in court filings that it once had "over 700 client accounts and assets under management in excess of $1.2 billion."  However, by the beginning of 2015, its clientele had decreased dramatically - "currently, the Debtor has approximately 410 accounts, 355 of which...

December 10, 2014
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Revel AC Makes it Official & Seeks Approval to Terminate Asset Purchase Agreement with Brookfield

Breaking News Alerts from Chapter11Dockets.com


Through a highly-contested bankruptcy court-supervised asset sale process, Revel AC, Inc. reached agreement with Brookfield US Holdings LLC to sell substantially all of its assets.  Those assets comprise the Revel hotel and casino complex in Atlantic City, New Jersey - a sleek 47-story, 710-foot high tower (the tallest building in the city) with 6.2 million square feet including a 130,000 square foot casino located on approximately 20 acres with 820 feet of boardwalk frontage.  The sale, which was approved by...

December 10, 2014
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New York City Opera Seeks Approval of Sale Procedures, Identifies Stalking Horse Purchaser

Breaking News Alerts from Chapter11Dockets.com


Late this afternoon, New York City Opera, Inc. filed a motion with the Bankruptcy Court for the Southern District of New York seeking approval of bid procedures governing the sale of certain of its assets pursuant to Section 363 of the Bankruptcy Code, as well as approval of bid protections for its stalking horse bidder for the assets.  A copy of the motion is available by clicking here; the following is a summary of some of...

December 2, 2014
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And the Winner of the Auction for Gaspari Nutrition's Assets is...

Breaking News Alerts from Chapter11Dockets.com


Yesterday, Gaspari Nutrition, Inc. held an auction for the sale of its assets pursuant to procedures approved by the United States Bankruptcy Court for the District of New Jersey in late October.  The auction drew participation from four bidders and, this afternoon, Gaspari announced the results of the auction: Allegro Nutrition LLC was the winner bidder with a bid of $10,100,000 HPH Health, LLC was designated as the back-up bidder with a bid of $10,000,000 Hi-Tech Nutraceuticals, LLC was...

November 28, 2014
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Tactical Intermediate Holdings, Inc.'s Plan of Liquidation Goes Effective

Breaking News Alerts from Chapter11Dockets.com


On November 28, 2014, Tactical Intermediate Holdings, Inc. announced that the Effective Date under the Plan of Liquidation occurred and the transactions contemplated by the Plan were effectuated.  U.S. Bankruptcy Judge Kevin Gross entered an order confirming the Plan of Liquidation for Tactical Intermediate Holdings and its affiliates on November 13, 2014. According to the notice filed with the Delaware bankruptcy court today: All requests for payment of an Administrative Claim incurred on or after September 15, 2014 must be...

November 25, 2014
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PBGC Challenges Reichhold, Inc.'s Proposed Bankruptcy Sale Procedures

Breaking News Alerts from Chapter11Dockets.com


Just minutes ago, the Pension Benefit Guaranty Corporation filed an objection to the bidding procedures proposed by Reichhold, Inc. to govern the sale of all or substantially all of its assets pursuant to Section 363 of the Bankruptcy Code.  A copy of the objection can be downloaded by clicking here. On November 12th, Reichhold filed a motion asking the bankruptcy court to set procedures for the sale of substantially all of its assets to Reichhold Acquisitions...

September 11, 2014
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Foreign Buyers of US Assets in Section 363 Sale: National Security Regulatory Review

Christopher M. Cahill
Lowis & Gellen LLP
Chicago, Illinois
312 628 7193
ccahill@lowis-gellen.com


Foreign entities are not barred by the Bankruptcy Code from purchasing assets in section 363 sales in bankruptcy cases.  Usually, the debtor’s estate and creditors welcome anyone who may bid up the sale price and raise the return to the estate and creditors from the auction sale.  For the foreign purchaser, buying assets out of a bankruptcy sale under section 363(c) promises, among other things, a rapid process, assets at a good price, and the...

July 15, 2014
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RECOMMENDED READING: How Fisker and Free Lance Star-Publishing Did Not Alter Credit-Bidding

From the Editorial Staff of Commercial Bankruptcy Investor


The Editorial Staff of Commercial Bankruptcy Investor recently reviewed the seemingly earth-shaking Fisker and Free Lance Star-Publishing orders limiting credit bidding rights. The Editorial Staff concluded that much of the angst is misplaced and that credit bidders should try to be the least bit cool in credit bidding, in particular to avoid inequitable behavior in pressuring for quick sales to them in bankruptcy and to avoid credit bidding with problematic lien coverage of the property...

July 7, 2014
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Try to Be the Least Bit Cool: Credit-Bidding After Fisker and Free Lance Star-Publishing

From the Editorial Staff of Commercial Bankruptcy Investor


Holders of secured debt now have two cases to make them nervous as to whether they got all they paid for with respect to their right to credit bid at a sale of the collateral in a section 363 sale in bankruptcy.  It may appear that both courts chopped back credit bidding rights solely to encourage cash bids.  It turns out that verbiage used in the two orders is more alarming than the actual bases...

June 10, 2014
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RECOMMENDED READING: PACA Claims in Bankruptcy

From the Editorial Staff of Commercial Bankruptcy Investor


Certain suppliers of agricultural goods get paid ahead of secured party, both inside bankruptcy and outside bankruptcy. The suppliers benefit from a federal statutory trust imposed to protect them from nonpayment. The goods involved are “fresh fruit and fresh vegetables of every kind and character” – and regulations set the limits on what qualifies. Suppliers must meet some procedural requirements. For a great primer on this subject, see: Sean M. Monahan & Dallas N. Cruz, “PACA...

June 4, 2014
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Not Necessarily Free and Clear I: Purchasing Real Property in a Section 363 Sale

From the Editorial Staff of Commercial Bankruptcy Investor


Lou is considering purchasing commercial real property from a company in bankruptcy. Lou is skeptical that, as he has heard, a section 363(b) sale “cleans” the assets of all liens, claims, and encumbrances. Lou’s skepticism is well-founded. The Golf Course Case. Golf course land was sold via a section 363 sale, and the sale was authorized by the bankruptcy court in a sale order that provided that the sale was “free and clear of all...

March 25, 2014
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90 Second Lesson: Secured Creditors and Toll Charges

From the Editorial Staff of Commercial Bankruptcy Investor


Editors’ Note:  this is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to cc@dailydac.com and we will try to answer it.    QUESTION:  An investment banker recently wrote in, saying this:  “I am currently helping a troubled company sell itself.  The proposed buyer wants to buy its assets through a 363 sale in Chapter 11 and is offering to pay the full amount the bank...

March 4, 2014
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90 Second Lesson: To Stalk or Not to Stalk?

From the Editorial Staff of Commercial Bankruptcy Investor


Editors’ Note:  this is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to cc@dailydac.com and we will try to answer it.  QUESTION:  Jamie S. emailed recently, asking “[c]an you please sum up the pros and cons of serving as the “stalking horse” in a bankruptcy sale? ANSWER:  Yes, Jamie, we can.  A stalking horse bidder plays an important role in many bankruptcy acquisitions, and one...

February 19, 2014
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Bid Now or Forever Hold Your Peace: Challenging the Results of a Section 363 Sale in Bankruptcy (In re New Energy Corp.)

  • Jonathan T. Brand
  • Lakelaw
  • Chicago, Illinois
  • (312) 360-1505
  • jbrand@lakelaw.com
  • www.lakelaw.com

You would like to purchase wind turbines in a lease-to-own scenario, that is, you would like to take possession of certain items and pay for the purchase or ownership over time or in a lump-sum at some point in the future.  You prefer this mode to an outright cash purchase because of your other cash needs.  Opportunity strikes! Wind Turbine, LLC has filed chapter 11 and intends to settle up with its secured creditors by...

February 6, 2014
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The Fisker Case: My Credit Bid is Capped at the Amount I Paid for the Debt?

  • Jonathan T. Brand
  • Lakelaw
  • Chicago, Illinois
  • (312) 360-1505
  • jbrand@lakelaw.com

One way to purchase assets (including the assets of a business as a going concern) is to prevail at a foreclosure sale or a § 363 bankruptcy auction with a credit bid.  The first step is to acquire the senior secured debt on the assets at a steep discount.  The next step is to outbid cash bidders with a credit bid up to the face value of the debt.  Last year, the US Supreme Court...

June 9, 2013
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Buying Operating Assets from an Insolvent Seller: a Practical Guide to Assessing Legal Risk

  • Jonathan Friedland
  • Sugar Felsenthal Grais & Hammer, LLP
  • Chicago, Illinois
  • (312) 704-2770
  • jfriedland@sugarfgh.com

 “One man's rubbish is another man's treasure.” -William & Robert Chambers Journal of popular literature, science and arts (1879)  "A little learning is a dangerous thing" -Alexander Pope, An Essay on Criticism (1709)  Buying a business from a financially distressed seller can present a fantastic opportunity to buy low.  Before doing so, however, any buyer must take into account a host of considerations.  These include, but aren’t limited to, operational, competitive, integration, and legal issues....



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