Buying Assets from Bankruptcy Estates | Finding inefficient markets!
Buying Assets from Bankruptcy Estates — finding the inefficient market! There is a huge untapped resource of undervalued assets available for sale from bankruptcy estates.
A common financial concept is the idea of efficient markets. Purchasing assets from large companies in Chapter 11 through 363 sales is a more efficient market–meaning that more buyers are looking and the prices of the assets more accurately reflects current market value.
However, assets in small chapter 11 (or even Chapter 7 cases) get much less attention and are ripe for picking at discount prices.
Moreover, these purchases are among the safest. You can obtain a federal court order ensuring that you are purchasing the assets under Bankruptcy Code Section 363 “free and clear of all liens, claims and encumbrances” on the asset — effectively removing those “warts” from the asset that kept it from being sold in the first place.
Ask me how you can tap into this market! – Richard Granthttp://chapter11dallas.com/contact-us/
How do you buy assets from a Bankruptcy Estate? What is a Section 363 Sale?
After a company files for bankruptcy, it must obtain court approval to sell its assets outside of the ordinary course of business. Section 363(b) of the Bankruptcy Code (11 U.S.C. § 363) provides a procedure for a debtor to obtain this approval on a motion and a hearing. Section 363 sales are generally used to sell smaller assets, but they can also include all or substantially all of a debtor’s assets if certain additional legal requirements are satisfied (see Sales of All or Substantially All Assets). They are usually conducted by public auction under the supervision of the bankruptcy court (see The Section 363 Sale Process), but section 363 sales can also be private. A main advantage of a section 363 sale is the ability to obtain assets free and clear of liens and most liabilities attached to the assets (see Free and Clear of Interests).
Typically, during economic downturns there are increasing numbers of financially troubled companies with assets that may be attractive targets for private equity firms and strategic buyers to purchase using section 363 sales. These prospective buyers should consider the advantages and disadvantages of buying assets through a section 363 sale, how the process works and strategically at what point in the process to engage with the debtor-seller.