In The (Red)®

In The (Red)®

The Business Bankruptcy Blog

Tag Archives: asset purchase

Amendments To The Federal Bankruptcy Rules, Plus A New “Free And Clear” Sale Motion Filing Fee, To Take Effect December 1, 2013

Posted in Business Bankruptcy Issues, Recent Developments
Almost every year, changes are made to the set of rules that govern how bankruptcy cases are managed — the Federal Rules of Bankruptcy Procedure. The changes address issues identified by an Advisory Committee made up of federal judges, bankruptcy attorneys, and others. Rule Amendments. This year the rule amendments mainly affect bankruptcy cases filed… Continue Reading

DIP Financing: How Chapter 11’s Bankruptcy Loan Rules Can Be Used To Help A Business Access Liquidity

Posted in Business Bankruptcy Issues, The Financially Troubled Company
Cash Is King. An army may march on its stomach, but for companies, it’s liquidity that keeps the business going. For many companies, typical sources of liquidity, beyond cash flow from sales or other revenue, are (1) financing from banks or other secured lenders, (2) credit from vendors that can reduce immediate liquidity needs, and (3) when needed,… Continue Reading

Spring 2013 Edition Of Bankruptcy Resource Now Available

Posted in Business Bankruptcy Issues, Recent Developments
The Spring 2013 edition of the Absolute Priority newsletter, published by the Bankruptcy & Restructuring group at Cooley LLP, of which I am a member, has now been released. The newsletter gives updates on current developments and trends in the bankruptcy and workout area. Follow the links in this sentence to access a copy of the newsletter. You can… Continue Reading

Seventh Circuit Decision Gives Support To Protecting Buyers In Bankruptcy Sales From Successor Liability

Posted in Business Bankruptcy Issues, Recent Developments
Last week, the U.S. Court of Appeals for the Seventh Circuit addressed whether a buyer of assets outside of bankruptcy (in this case, from a receivership), takes on successor liability for federal Fair Labor Standards Act ("FLSA") claims made by the employees of the company whose assets it purchases. Although the case arose in a receivership, the Seventh Circuit’s opinion provides important… Continue Reading

Using Chapter 11 Bankruptcy’s Sale Process To Achieve An Exceptional Sale Price

Posted in Business Bankruptcy Issues, The Financially Troubled Company
A Difficult Problem. Imagine that your company is facing a government investigation, requiring you to spend hundreds of thousands of dollars in legal fees and costs, while being threatened with substantially more legal expense. That financial burden is simultaneously starving the company of cash needed to grow the business, and cash balances are heading toward… Continue Reading

Supreme Court Bids Adieu To Plans Denying Secured Creditors The Right To Credit Bid

Posted in Business Bankruptcy Issues, Recent Developments
On May 29, 2012, only a little more than a month after the April 23, 2012 oral argument in the case, the U.S. Supreme Court issued its decision in RadLAX Gateway Hotel, LLC, et al. v. Amalgamated Bank on the question of "credit bidding." You can get a copy of the opinion by following the link in this sentence.… Continue Reading

Winter 2012 Edition Of Bankruptcy Resource Now Available

Posted in Business Bankruptcy Issues, Recent Developments
The Winter 2012 edition of the Absolute Priority newsletter, published by the Bankruptcy & Restructuring group at Cooley LLP, of which I am a member, has recently been released. The newsletter gives updates on current developments and trends in the bankruptcy and workout area. Follow the links in this sentence to access a copy of the newsletter. You can… Continue Reading

Fall 2009 Edition Of Absolute Priority Now Available

Posted in Business Bankruptcy Issues, Recent Developments
The Fall 2009 edition of the Absolute Priority newsletter, published by the Cooley Godward Kronish LLP Bankruptcy & Restructuring group, of which I am a member, has just been released. The newsletter gives updates on current developments and trends in the bankruptcy and workout area. Follow the links in this sentence to access a copy of the… Continue Reading

Section 363 Sales And Beyond: An M&A Lawyer’s Perspective On Purchasing Assets From Distressed Companies

Posted in Business Bankruptcy Issues, The Financially Troubled Company
With the economy suffering through the longest recession since the 1930s, it’s little wonder that much of the merger and acquisition ("M&A") activity these days has been focused on distressed companies. The Chrysler and General Motors cases may be the best-known examples, but Chapter 11 bankruptcy is frequently used by companies large and small to sell assets through Section 363… Continue Reading

Fall 2008 Edition Of Bankruptcy Resource Is Now Available

Posted in Business Bankruptcy Issues, Recent Developments, The Financially Troubled Company
The Fall 2008 edition of the Absolute Priority newsletter, published by the Cooley Godward Kronish LLP Bankruptcy & Restructuring group, of which I am a member, has just been released. The newsletter gives updates on current developments and trends in the bankruptcy and workout area. Follow the links in this sentence to access a copy… Continue Reading

Will Section 363 “Free And Clear” Sale Orders Survive An Appeal? A Recent Appellate Decision Raises New Doubts

Posted in Business Bankruptcy Issues, Recent Developments
The primary objective of any buyer at a Section 363 sale, whether one purchasing for cash or an existing secured creditor making a credit bid, is to obtain good title to the purchased assets free and clear of any liens, claims, or interests. However, a recent decision on this subject by the Bankruptcy Appellate Panel ("BAP") of the United States… Continue Reading

Supreme Court Decision Settles The Section 1146(a) Transfer Tax Exemption Issue

Posted in Business Bankruptcy Issues, Recent Developments
On June 16, 2008, the United States Supreme Court issued its decision in Florida Dept. of Revenue v. Piccadilly Cafeterias, Inc., the case involving whether Section 1146(a) of the Bankruptcy Code, which exempts from stamp or similar taxes any asset transfer “under a plan confirmed under section 1129 of the Code,” applies to transfers of assets occurring… Continue Reading

What Happened At The Supreme Court Oral Argument In The Section 1146(a) Bankruptcy Transfer Tax Exemption Case?

Posted in Business Bankruptcy Issues, Recent Developments
On Wednesday, March 26, 2008, the United States Supreme Court heard oral argument in the case of Florida Dept. of Revenue v. Piccadilly Cafeterias, Inc. A link to the transcript of the oral argument can be found below. The case presents the following question: Whether section 1146(a) of the Bankruptcy Code, which exempts from stamp… Continue Reading

Assignments For The Benefit Of Creditors: Simple As ABC?

Posted in Business Bankruptcy Issues, The Financially Troubled Company
Companies in financial trouble are often forced to liquidate their assets to pay creditors. While a Chapter 11 bankruptcy sometimes makes the most sense, other times a Chapter 7 bankruptcy is required, and in still other situations a corporate dissolution may be best. This post examines another of the options, the assignment for the benefit of creditors,… Continue Reading

Delaware Bankruptcy Court Adopts New Local Rule For Section 363 Sales

Posted in Business Bankruptcy Issues, Recent Developments
The Delaware Bankruptcy Court has recently adopted amended Local Rules, which became effective on February 1, 2008, and they include meaningful changes to the procedures governing Section 363 sales of assets. New Local Rule 6004-1, entitled "Sale and Sale Procedures Motions," requires additional disclosure and the highlighting of certain key provisions often seen in sale… Continue Reading

Don’t Miss The Important Business Bankruptcy Rule Amendments That Just Took Effect

Posted in Business Bankruptcy Issues, Recent Developments
On December 1st of almost every year, amendments to the Federal Rules of Bankruptcy Procedure — the ones that govern how bankruptcy cases are managed — take effect to address issues identified by an Advisory Committee made up of federal judges, bankruptcy attorneys, and others. Often the changes are relatively minor and of interest only… Continue Reading

Have Section 363 Sale Orders Gone Too Far?

Posted in Business Bankruptcy Issues, Recent Developments
Concerned about the broad-reaching and complex forms of Section 363 asset orders being submitted for approval, this past week the U.S. Bankruptcy Court for the Northern District of California issued a set of "Guidelines re Sale Orders" as well as a form of "Model Sale Order." (Each document is available by clicking on its respective title in… Continue Reading

Section 363 Sales: Interesting Article Takes A Further Look

Posted in Business Bankruptcy Issues, The Financially Troubled Company
David Powlen, Managing Director and Partner at Western Reserve Partners LLC, has an interesting article on the Turnaround Management Association website entitled "Bargains Await Buyers Skilled At Navigating Section 363 Minefields." It gives a good overview of the range of issues that arise in the context of a sale under Bankruptcy Code Section 363. Among… Continue Reading

Copyrights And Bankruptcy Sales: The Importance Of Protecting Your Rights

Posted in Business Bankruptcy Issues, Recent Developments
I’ve posted in the past about bankruptcy asset sales and how parties with executory contracts need to keep track of bankruptcy cases to protect their rights. Steve Jakubowski of The Bankruptcy Litigation Blog has an entertaining and informative post about a recent Court of Appeals decision involving rappers, recording companies, copyrights, and bankruptcy that raises some… Continue Reading

Bankruptcy Asset Sales: What Parties With Contracts Should Watch For

Posted in Business Bankruptcy Issues
In many corporate bankruptcy cases, the debtor will use the bankruptcy process to sell its assets and to assume and assign valuable leases, executory contracts, and licenses (see earlier posts on what happens to leases in bankruptcy, to executory contracts, and to intellectual property licenses, a special type of executory contract).  This post discusses some mechanics of the… Continue Reading

Buying Assets From An Insolvent Company — Balancing Risk And Reward

Posted in Business Bankruptcy Issues, The Financially Troubled Company
Insolvent or nearly insolvent companies can present an attractive opportunity to purchase assets on the cheap, or at least at a significantly reduced cost.  Of course, a buyer purchasing assets from a troubled company wants to be as sure as possible that it is buying only the target’s assets – and not also taking on all of the… Continue Reading