Interested in training for your team? Click here to learn more

Distressed M&A Deal Structures: In- and Out-of-Court Restructuring, Receivership, Liquidation, Section 363 Sales

Understanding the Types of Distressed M&A Structures and the Pros and Cons Associated With Each

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

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Wednesday, January 31, 2024

Recorded event now available

or call 1-800-926-7926

This CLE webinar will discuss the unique aspects and strategies involved in structuring the purchase/sale of a financially distressed company. The panel will discuss the various types of deal structures including out-of-court restructuring, Chapter 11 restructuring, receivership, assignment for the benefit of creditors, liquidation, and Section 363 sales. The panel will also outline due diligence best practices for buyers and sellers when acquiring a financially distressed company.


Distressed M&A presents an opportunity to purchase the assets of a seller in financial distress at bargain prices for qualified bidders. It is critical for distressed sellers and buyers to take early and proactive steps to formulate and implement clear strategies designed to maximize optionality, leverage, and control in order to achieve the desired outcome and reduce the likelihood of subsequent attacks on a distressed transaction.

The distressed sale process is completed under a compressed time frame, which often causes there to be less diligence done by the buyer. Therefore, it is critical for purchasers of distressed assets to understand the legal risks associated with out-of-court sales, as well as the protective measures offered during in-court Chapter 11 sales.

For sellers, distressed M&A represents a method to obtain short-term liquidity to remain solvent. For instance, the rationale for the divestiture of a non-core asset could be to use the sale proceeds to meet near-term debt obligations. Alternatively, the seller may want an outright sale of its entire business, which is usually done in an effort to avoid the onerous restructuring process.

When structuring the acquisition of a distressed business, deal parties must evaluate whether to pursue an asset sale or stock sale, both of which have significant legal, valuation, and tax implications. When acquisitions occur through a Chapter 11 bankruptcy proceeding or Section 363 sale, buyers and sellers face additional legal hurdles. Also, in a Section 363 sale there are often pre-petition solicitations that culminate in the selection of a lead bidder or "stalking horse," that establishes a bidding floor and purchase structure. There are additional advantages and disadvantages to stalking horse status that must be considered.

Listen as our experienced panel discusses opportunities and challenges in distressed M&As and offers strategies for deal counsel for structuring the deal both inside and outside of a bankruptcy proceeding, conducting due diligence, and integrating the distressed business post-acquisition.



  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. Distressed M&A structures
    1. Out-of-court restructuring
    2. Chapter 11 restructuring
    3. Receivership
    4. Assignment for benefit of creditors
    5. Liquidation (Chapter 7, foreclosure sale, self-liquidation, other)
  3. Acquisitions post-bankruptcy
    1. 363 sales
    2. Acquisition under Chapter 11 reorganization plan
    3. Stalking horse bidder: pros and cons
  4. Market outlook and key takeaways


The panel will review these and other key issues:

  • What are some of the potential legal pitfalls with distressed M&A deals?
  • What unique issues arise when M&A deals occur as a part of a bankruptcy proceeding?
  • What are the best practices for deal counsel to tailor transaction terms in distressed transactions?
  • 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?


Appleby, Laura
Laura E. Appleby

Faegre Drinker Biddle & Reath

Ms. Appleby represents clients in all aspects of complex bankruptcy proceedings, out-of-court restructurings and...  |  Read More

Radtke, Keith
Keith P. Radtke

Faegre Drinker Biddle & Reath

Mr. Radtke specializ​es in mergers and acquisitions, private equity, commercial transactions and general corporate...  |  Read More

Access Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include course handouts.

To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video