Bankruptcy 363 Sales and Successor Liability: Navigating Limitations on "Free and Clear" of Liens and Other Interests

Many Bankruptcy Court orders approving sales under Section 363(f) of the Bankruptcy Code include provisions purporting to make the sales "free and clear" of successor liability. However, it is not always clear that these provisions will be enforced in later actions by third parties against the buyers.

There are circumstances where the language of a "free and clear" sale order may not match the reality of whether a buyer will be insulated from future claims, and counsel must be able to structure the transaction to maximize the available protections for a buyer in the Section 363 sales process, including picking the best structure, determining the best types of notice to potential claimants, and deciding whether to proceed under Section 363 under a plan of reorganization or some other process.

Listen as our authoritative panel of seasoned bankruptcy practitioners guides you through the issues that may limit "free and clear" sales under Section 363 and the best drafting and structuring options to ensure that the purchaser's reality meets its expectations.

1. Overview of Section 363 sales and "free and clear" protections: in rem and in personam perspectives
2. Overview of "successor liability" under non-bankruptcy law
3. Recent decisions limiting free and clear protections for Section 363 buyers facing successor liability claims
4. Practice tips: negotiating and litigating the scope of Section 363 sale orders
5. Practice tips: litigating claims against Section 363 buyers in non-bankruptcy courts

The panel will address these and other key questions:

• How should bankruptcy law and policy be applied to the doctrine of successor liability of Section 363 buyers?
• What can Section 363 buyers do to reduce certain types of successor liability risk?
• Are there risks for Section 363 buyers that are outside the scope of what bankruptcy can address?