Distressed M&A Investing: Exercising Acquisition Opportunities In and Out of Chapter 11 Bankruptcy

Recording of a 90-minute premium CLE video webinar with Q&A


Conducted on Wednesday, May 19, 2021

Recorded event now available

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Course Materials

This CLE course will provide guidance on how best to acquire a distressed company from every possible point of entry, whether that consists of buying existing or newly issued stock, merging with the target, buying assets, or buying existing debt in the hope that it converts into ownership.

Description

Distressed companies can represent attractive acquisition targets. Their stock and debt often trade at prices reflecting the difficulties they face, and they may be under pressure to sell assets or securities quickly to raise capital or pay down debt. As the market shows signs of distress across several sectors, traditional and strategic investors must consider deploying capital in distressed businesses. Meanwhile, a competent counsel for modern investors must understand the unique risks and benefits of bankruptcy M&A options.

Out-of-court transactions lack the imprimatur of a federal court and are subject to challenge, uncertainty, future litigation, and objections by governmental entities. A transaction executed under the U.S. Bankruptcy Code can bind governmental entities, non-consenting parties, and pretermit challenges by dissatisfied creditors. Therefore, complex businesses experiencing distress often require a bankruptcy solution to effectuate a helpful M&A transaction.

Hybrid approaches such as "prepackaged" and "pre-negotiated" bankruptcy reorganization plans are common for troubled companies with sufficient lead time to wrangle an out-of-court compromise before the cash runs out. Alternatively, a sale under Section 363 of the Bankruptcy Code can provide an expedited transaction, albeit with fewer protections. Creditors or outside investors can, in the most complex transactions requiring the greatest certainty, use a reorganization plan to reorganize, sell, merge, liquidate, fracture, or otherwise modify a business--even a foreign business.

Listen as our authoritative panel discusses the options available to private equity and other opportunistic investors looking to acquire distressed companies, assets, and debt--both before and after a bankruptcy filing.

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Outline

  1. Critical considerations in acquiring distressed assets outside of bankruptcy
    1. What is being acquired: company, particular assets?
    2. Ability to obtain the agreement of existing creditors and shareholders
    3. Feasibility of pre-packaged bankruptcy
  2. Acquisitions post-bankruptcy
    1. 363 sales
    2. Acquisition under Chapter 11 reorganization plan

Benefits

The panel will review these and other key issues:

  • What are the advantages and disadvantages of trying to acquire distressed assets or companies before a bankruptcy filing?
  • What are the key provisions to include in a pre-packaged reorganization plan?
  • When might a 363 sale be an appropriate method for acquiring assets out of bankruptcy? What are the pitfalls for the investor?
  • How is an acquisition structured and approved in a Chapter 11 setting?

Faculty

Crowley, Leo
Leo T. Crowley

Partner
Pillsbury Winthrop Shaw Pittman

Mr. Crowley, leader of the firm’s Insolvency & Restructuring practice, is known as an accomplished counselor...  |  Read More

Powers, Ted
Ted Powers

Partner
Pillsbury Winthrop Shaw Pittman

Mr. Powers has a broad practice that covers private equity and venture capital transactions, mergers and acquisitions...  |  Read More

Ray, Hugh
Hugh M. Ray, III

Partner
Pillsbury Winthrop Shaw Pittman

Mr. Ray is a partner in Pillsbury’s Insolvency & Restructuring practice, where he focuses on complex...  |  Read More

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