Section 363 Sale

Bankruptcy code section 363 f provides that a debtor in possession in a chapter 11 case or trustee may sell property outside the ordinary course of business free and clear of any interest in such property of an entity other than the estate under certain conditions.

Section 363 sale. Though in most cases 363 sale refers to the latter. Section 363 sales require the approval of the bankruptcy court obtained on a motion and hearing and are typically conducted by public auction under the supervision of the bankruptcy court. Section 363 sales are typically asset sales although if the debtor is a holding company it can sell its stock in its subsidiaries in a section 363 sale.

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. Despite the form of the transaction the buyer should still identify all claims and liabilities that exist against the assets including any unrecorded disputed or contingent liabilities. The sale enables debtors to fulfill their obligations to creditors by selling their assets and using the funds collected to settle their debts.

The assets that come under this section can include anything from the sale of office furniture under chapter 7 to the sale of all substantial assets under chapter 11. A section 363 sale looks much like a traditional controlled auction. Sales of assets under section 363 can range from the sale of office furniture by a chapter 7 trustee or a sale of substantially all assets of a chapter 11 debtor.

To obtain such approval a trustee or dip must first provide notice to stakeholders and an opportunity for a hearing. A sale under section 363 of the united states bankruptcy code section 363 sale can provide a useful tool for distressed companies seeking to sell their assets and a potential opportunity for buyers to purchase the assets at bargain prices. The term 363 sale refers to a sale of a debtor s assets authorized under section 363 of the bankruptcy code.

Basic section 363 sale mechanics include an initial bidder colloquially known as a stalking horse who reaches an agreement to purchase assets from the chapter 11 debtor. A 363 sale is the sale of the assets of an organization under section 363 of the u s.