Section 363 Bankruptcy Sales: Credit Bids and Distressed Asset Transactions

Legal Strategies for Buyers and Lenders

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


Conducted on Tuesday, May 12, 2009
Recorded event now available


This seminar will review the Section 363 bankruptcy sale process, the expanding use of credit bids by investors in distressed debt, the implications of the Clear Channel case on credit bids, and offer best practices for buyers and secured creditors involved in Section 363 sales.

Description

Increasingly, bankruptcy has become a vehicle for sale rather than reorganization. Large shortfalls between secured debt and market value of collateral, and a dearth of buyers with cash or financing to bid, make it more common for secured creditors to successfully credit bid on their collateral.

An emerging strategy of investors is “loan to own” whereby an investor buys the debt of a distressed business at a steep discount, and once the company is in bankruptcy, makes a credit bid at auction for the face amount of the debt, and converts it to a controlling equity position.

The bankruptcy code generally favors secured creditors, but there are viable means for other creditors to challenge credit bids. Moreover, Clear Channel calls into question the prevailing assumption that a secured creditor's successful credit bid qualifies as a "free and clear" sale.

Listen as our panel of bankruptcy attorneys discusses the bankruptcy sales process, the varying strategies for secured creditors in submitting credit bids, and best practices for making and overcoming challenges to credit bids.

Outline

  1. Asset sales generally
    1. Standards for approval under Section 363
    2. Sale procedures
      1. Use of professionals
      2. Due diligence
      3. Stalking horse bidders
      4. Auction process
      5. Sale order
  2. Credit bids generally
    1. Secured status
    2. Claim amount
    3. Bid amount
    4. Consent requirements in multi-lender financings
    5. Ownership structure and governance
    6. Additional financing
  3. Challenges to credit bidder’s standing
    1. Recharacterization of debt
    2. Good faith
    3. Equitable subordination
  4. Secured creditor issues
    1. Defending a loan to own strategy
    2. Credit bids after Clear Channel
    3. Asset sales as part of a plan of reorganization

Benefits

The panel will review these and other key questions:

  • How can unsecured creditors mount an effective challenge to a secured lender's credit bid?
  • How can a secured creditor defend its loan-to-own strategy against credit bid challenges?
  • What is the impact of the Clear Channel Outdoor Inc. v. Knupfer decision on credit bids and buyers in bankruptcy sales?

Faculty

Thomas M. Horan, Member
Womble Carlyle, Wilmington, Del.

He focuses his practice on bankruptcy and creditors rights matters and is experienced in representing a broad range of entities in complex commercial bankruptcy cases including debtors, committees, debtor-in-possession lenders, secured and unsecured creditors, trustees, landlords, lessors, insurers and parties purchasing assets. He regularly defends preference and fraudulent transfer actions.

Derek M. Stoldt, Partner
Kaye Scholer, New York

He focuses his practice on mergers and acquisitions, public and private securities offerings, joint ventures and licensing arrangements. His clients include financial sponsors, such as private equity, hedge and venture capital funds, as well as public and private companies in a range of industries.

Michael B. Solow, Partner
Kaye Scholer, Chicago

He has over 20 years experience representing creditors, trustees and governmental agencies and other parties nationwide in the bankruptcy and insolvency area. He is Co-Chair of the firm's Business Reorganization and Creditors' Rights Department and is a frequent lecturer on various topics relating to dealing with insolvent entities.

Ordering

On-Demand CLE - Streaming Audio

Our best recorded option for CLE accreditation. Includes recorded streaming audio of full program plus PDF handouts.

Strafford is an approved provider and can request CLE credit for On-Demand programs in the following states. (Note: Some states restrict CLE eligibility based on the age of a program. Refer to our state CLE Map for additional information.)

AK, AZ, CA, CO, DE, FL, GA, HI, IA, ID, IL, IN*, KY, LA, ME, MN, MO, MT, NC, ND, NH**, NJ, NM, NV, NY*, OH*, OK, OR, PA, SC, TN, TX, UT, VA, VT, WA, WI, WV, WY

*Only available for attorneys admitted for more than two years. For OH CLE credits, only programs recorded within the current calendar year are eligible - contact the CLE department for verification.

**NH attendees must self-determine if a program is eligible for credit and self-report their attendance.

On-Demand CLE Audio $149.00

How does this work?


Recorded Event

Includes full event recording plus handouts.

Strafford is an approved provider and self-study CLE credit is available in the following states. (Note: Some states restrict CLE eligibility based on the age of a program. Refer to our state CLE Map for additional information.)

AK, AZ, CO, FL, GA, HI, IA, ID, IL, KY, ME, MN, MO, MT, ND, NM, OR, PA, TN, TX, UT, VT, WA, WV, WY

To apply for Continuing Education credit for a recorded event, contact Strafford CLE to obtain an Attorney Affirmation Form at 1-800-926-7926 ext. 35 or CLE@straffordpub.com.

Recorded Audio Download (MP3) $49.00

How does this work?

CD $49.00 plus $9.45 S&H

How does this work?

Program Materials

Requires Adobe Reader 8 or later. Download Acrobat FREE.

Program Materials

Requires Adobe Reader 8 or later. Download Acrobat FREE.

or call 1-800-926-7926

CLE Credits

Many states grant CLE credits for on-demand streaming audio programs and recorded events. Our programs are pre-approved in many states. Refer to our state CLE map for state-specific information.

or call 1-800-926-7926

Customer Reviews

I was pleased with the webinar’s quality topic and the ease of participation.

Mary Brown

McAFee & Taft

I thought that the program materials were simple to follow and the program was straight forward.

Scott Olson

Seyfarth Shaw

The seminar was very insightful with a terrific grasp of the relevant case law and legal issues.

Gregory Fox

Friedman Kaplan Seiler & Adelman

The webinar was very informative on very pertinent matters and had a good flow.

Noam Wiener

Allen & Overy

I thought the program was excellent.

Michelle Rice

Arkin Kaplan Rice

or call 1-800-926-7926

Bankruptcy Law Advisory Board

Mark N. Berman

Partner

Nixon Peabody

Michael E. Foreman

Partner

ForemanLaw

Matthew Gensburg

Shareholder

Greenberg Traurig

Brian E. Greer

Partner

Dechert

Douglas Lipke

Shareholder

Vedder Price

Victor Milione

Partner

Nixon Peabody

Steven B. Smith

Counsel

Dickstein Shapiro

Michael Solow

Partner

Kaye Scholer

Robert A. Weber

Counsel

Skadden Arps Slate Meagher & Flom

or call 1-800-926-7926

Our Guarantee

Strafford webinars are backed by our 100% Unconditional Money-Back Guarantee: if you are not satisfied with any of our products, simply let us know and get a full refund. For more information regarding complaints and refunds, please contact us at 1-800-926-7926 ext 10. Complaints regarding this program can be submitted via the course evaluation found in the “Thank you” e-mail at the end of the course.