Section 363 Bankruptcy Sales: Auction v. Private Sale, Break-Up Fees, Carve-outs, Successor Liability
Course Details
- smart_display Format
Live Online with Live Q&A
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Bankruptcy
- event Date
Tuesday, July 22, 2025
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will discuss a Section 363 sale from beginning to end. Our speakers will examine, among other things, (1) the importance of pre-bankruptcy sale efforts; (2) bidding procedures, which establish a road map for the sale of a debtor's assets; (3) proper diligence procedures; and (4) the pros and cons of so-called "stalking-horse bidders," break-up fees, and expense reimbursements. Other topics our speakers will address include attacks on so-called "credit bidding," including efforts to cap a bidder's currency, potential sale structures to get auction proceeds to constituencies that the debtor and buyer need to approve the sale (e.g., a creditors committee), while "skipping" administrative claim holders, when the highest bid may not be the winning bid, and other important developments that have arisen in Section 363 sales.
Mr. Herman concentrates his practice on distressed public debt issues, insolvency matters involving upstream and midstream oil and gas companies, and distressed M&A, in addition to traditional bankruptcy and insolvency matters. He regularly advises lenders on the management of bankruptcy risk in their transactions; indenture trustees regarding defaulted public debt issues; and lenders regarding restructuring and bankruptcy. Additionally, Mr. Herman provides services on the debtors’ side, counseling financially distressed entities and their management on restructuring challenges pertaining to corporate governance issues.
Mr. Leggett practices in the areas of bankruptcy and complex commercial litigation. His experience includes investigating and prosecuting director and officer liability claims; representing trustees, creditors, equity holders, and debtors in bankruptcy proceedings; federal and state court commercial litigation; and trials in federal, bankruptcy, and state courts nationwide.
Mr. Garfield brings almost 30 years of experience practicing in cannabis, bankruptcy, and business transactions. He is a leading cannabis industry attorney, with experience in all issues concerning cannabis and hemp. Mr. Garfield represents private and public companies, investors (including private equity funds and family offices), landlords, lenders, manufacturers, hemp farmers, CBD manufacturers, and a wide range of ancillary businesses. He also provides legal opinions and regulatory advice to industry participants. Mr. Garfield's bankruptcy, restructuring, and distressed asset practice includes representation of clients in bankruptcy, receivership, and all matter of distressed situations, including Chapter 11 debtors, creditors’ committees, secured and unsecured lenders, shareholders, trustees, receivers, landlords, and purchasers of distressed assets. He also litigates adversary proceedings in bankruptcy court, including fraudulent transfers and preferences. Mr. Garfield assists clients in creditors’ rights matters in and out of court, including debt restructurings, liquidations, workouts, foreclosures, and collecting judgments. He also represents contractors and subcontractors in enforcing mechanics’ liens.
Section 363 of the Bankruptcy Code provides an attractive way for purchasers to acquire assets. These sales are accompanied by a bankruptcy court order that provides the asset transfer clear of liens, claims, and encumbrances and, in some instances, may provide a purchaser with additional protections. Buyers are often willing to pay a premium for these protections; however, there are many exceptions. Distressed investing professionals and counsel must appreciate the potential pitfalls of Section 363 sales.
Listen as our panel of experienced bankruptcy practitioners discusses the nuances of this powerful and prevalent bankruptcy tool. Our panel will review how to re-open bidding after it has closed, who has judicial standing to move to re-open a sale, successor liability issues of which purchasers (and even debtors) may be unaware, and best practices to avoid accusations of collusion. The panel will also outline how to operate a business in the days right after closing, including licensing issues, transition services agreements, and management agreements.
I. Section 363 requirements generally: when an auction vs. a private sale is appropriate
II. The stalking-horse bid
A. Break-up fee and expense reimbursement
B. Super-priority administrative expense, carve-out
III. The bankruptcy sale efforts--publication, actual notice to parties-in-interest
IV. Due diligence: reasonable period before bid, access to documents
V. Successor liability
VI. Executory contracts and unexpired leases
VII. Attacks on credit bidding
VIII. How to close the sale
IX. Operating the business post-sale
X. The future of Section 363 sales
The panel will review these and other key issues:
- What role does the stalking-horse bidder have in formulating the bidding process, and what are its primary concerns?
- What notice and due diligence rights should bidders want to see in the bidding procedures?
- What process should be followed for accepting and distributing qualified bids?
- How can a bidder ensure it has the flexibility to accept or reject executory contracts and unexpired leases upon closing of a 363 sale?
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