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90 Second Lesson: Secured Creditors and Toll Charges
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 is owed on its secured debt. The bank is pushing back, trying […]
Not Necessarily Free and Clear I: Purchasing Real Estate Property in a Section 363 Sale
Just Because A 363 Sale Says Free and Clear, Does Not Mean It Is Free and Clear A bankruptcy debtor is offering commercial property in a section 363 sale. It is an attractive property and Lou is considering purchasing it. Lou has heard that a section 363(b) sale “cleans” the assets of all liens, claims, […]
90 Second Lesson: To Stalk or Not to Stalk? Why be a Stalking Horse Bidder?
QUESTION: Jamie S. emailed recently, asking “Can 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 of the most important decisions confronting a purchaser in a bankruptcy acquisition […]
Stalking Horse Opportunity: Home Owners Bargain Outlet
Home Owners Bargain Outlet: Section 363 Bankruptcy Asset Sale Opportunity Prior to filing Chapter 11 on October 25th Home Owner’s Bargain Outlet (“HOBO”) was a leading regional home improvement bargain retailer of “special buys” (goods that come from opportunistic purchases of a wide array of products primarily from brokers and a handful of regular vendors/manufacturers- […]
From Penthouse to Ground Floor – The Penthouse Magazine Bankruptcy
The Life, Death and Many Reincarnations of Penthouse Magazine Penthouse International, publisher of Penthouse Magazine, sold for $11.2 million in June. The company was worth about $700 million (adjusted for inflation) at its height. The latest Penthouse Magazine bankruptcy highlights just how far Penthouse has fallen. The New Owner The buyer was WGCZ, which also owns […]
A Primer on the Chief Restructuring Officer (CRO)
A Brief History of the Chief Restructuring Officer The role of a Chief Restructuring Officer (“CRO”) is approximately four decades old. While still a somewhat new role in the 1990s, CROs are now ubiquitous in the restructuring community. Todd Zywicki, a George Mason law professor who specializes in bankruptcy law, traces the origin of the […]
Update on CFIUS National Security Review and the Section 363 Sale: Draper Athena as Stalking Horse for Assets of ATopTech, Inc.
A transaction in which a foreign company gains control of US assets can be hammered to sleep by the President acting upon the recommendation of the Committee on Foreign Investment in the United States (“CFIUS”). The delay of CFIUS review and its potential draconian consequence affect the viability of foreign purchaser participation in asset sales […]
Limiting Credit Bidding “For Cause” After In re Aeropostale
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 […]
Do’s and Don’ts of Gifting in Bankruptcy: When a Court Will Look a Gift Horse in the Mouth
The gifting doctrine in bankruptcy is not new and often is used to obtain creditor consensus to a debtor’s proposed exit – either through a chapter 11 plan or a 363 sale. A bankruptcy “gift” typically involves a structurally senior class voluntarily giving some of its property or distribution to a structurally junior class of […]
DOCKET BULLETIN: Court Overrules Chemours Objection / Approves Mississippi Phosphate’s Sale Motion
The United States Bankruptcy Court for the Southern District of Mississippi entered an Order last evening approving the amended sale motion of debtor Mississippi Phosphates Corporation (In re Mississippi Phosphates Corporation, et al., Case No. 14-51667-KMS, (the “Debtors”)), as well as separate settlements made between the Debtors and the Unsecured Creditors’ Committee (the “Committee”) and […]