Bankruptcy Section 363 Purchase And Sales Transactions - Sellers, Buyers, Bidders, And The "Stalking Horse"

Mergers and acquisitions are often threatened by the financial condition of one or more of the participants. Often times the values are only present if the enterprise will not become involved in third party litigation or endless disputes over title, successor liability, or other problems such as past regulatory compliance or environmental issues. There are always challenges for a business filing Chapter 11 bankruptcy but often it is the advantage of bankruptcy that must be considered. One of the largest challenges, and greatest benefits to a financially struggling business, involves purchase and sales of assets during the Chapter 11 process. The purchase and sales of these assets are governed by 11 USC § 363 (Section 363 of the United States Bankruptcy Code). Section 363 allows a debtor to sell its assets by following the procedures set down by the bankruptcy court. Most of these provisions involve complex procedures concerning the manner the assets should be sold, including simple purchase and sale agreements, to the more complex "stalking horse" auction process that permits bidding, overbids, breakup fees and the like.

The attorneys at Jordan, Hyden, Womble, Culbreth & Holzer, P.C., have overseen a large number of these types of § 363 sales. We work to ensure approval of the purchase or sales process and to ensure the process takes place in a manner most beneficial to your company's bottom line, or to advise and direct participants in the process of acquiring assets from a debtor's bankruptcy estate.

What Can And Cannot Be Done During The Section 363 Sale Process

There are a variety of provisions under Section 363 governing the use, sale or lease of property while your business is going through the bankruptcy process. Under Section 363, there are limitations on spending corporate funds and entering business transactions during bankruptcy, including the DIP financing issues, the use and continued use of intellectual property, ongoing real property lease rights and obligations, and operations in the context of an oil and gas company reorganization.

Our attorneys take immediate action to address operations, including purchase and spending concerns, and prompt implementation of the § 363 sale process. The advantage of a Section 363 sale is relative the quickness of selling or merging of assets and operations to, or with, another entity. Section 363 sales involve both the sale of smaller assets or only parts or portions of a debtor's assets, as well as sales of all major assets in the company.

Our lawyers provide guidance throughout the Section 363 process. We negotiate any necessary deal points, terms sheet, sale and auction process terms and the ultimate asset purchase agreements with prospective buyers or bidders. Our efforts also make certain that mistakes do not occur that would inhibit a productive and successful § 363 sale from being optimally conducted to best assist your distressed business.

Consult With Our Section 363 Bankruptcy Attorneys


To schedule a consultation regarding your business needs, contact our firm by calling 361-884-5678. Our Texas firm has offices in Austin and Corpus Christi.