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 the article’s observations:

• Unlike traditional private company M&A deals, Section 363 sales take place in the "fishbowl" of a bankruptcy proceeding;
• Although the bankruptcy process generally leads the debtor to seek an auction, some typical M&A bidders may not participate in a bankruptcy sale, potentially reducing the competition to a stalking horse bidder;
• Compensating for the usual lack of representations and warranties in an asset purchase agreement with a bankrupt company is the court’s sale approval order, which generally approves a sale free and clear of liens, claims, and interests; and
• A Section 363 sale may not be free of every claim or interest, however, as certain environmental and product liability claims may nevertheless pass to the buyer. 

The article also includes a helpful chart giving a graphic presentation of the relative risks and benefits of an out-of-court sale, a Section 363 sale, and the less common sale through a Chapter 11 plan of reorganization. For more on these issues, you may also be interested in this earlier post and linked article on buying assets from a financially distressed company.