3.10.10

Maya Pogoda and Sandra Sternberg: “Communications and the 363 Sale Process”

From the Daily Bankruptcy Review

As the economy continues to throttle more and more
financially borderline corporations, troubled companies
and their advisers are increasingly turning to what is
known as the “363 sale” to engineer their way out of
bankruptcy and liquidation. General Motors did it;
Chrysler did it; the Chicago Cubs did. Companies as
diverse as publisher Freedom Communications and
government information technology contractor
BearingPoint are turning to 363 sales to secure a future
for their businesses.

Often negotiated as part of a pre-negotiated or prepackaged
Chapter 11, the 363 sale, named after the section of
the Bankruptcy Code in which it is found, allows debtors
to sell assets “free and clear” of all liens, claims and
encumbrances. It also provides a controlled process for
entertaining and evaluating bids and completing the sale
process expeditiously.

But while the 363 process may be straight forward and
relatively swift, the potential for disrupting the business
is not. From the time the possibility of a sale process is
announced to the time it is completed may mean
serious distraction to the debtor’s ongoing business, as
employees, customers and vendors, in particular,
ponder the future of their jobs, their business relationships
and the products they purchase. And those
imponderables surely impact a business’ performance
during this time and have a direct impact on how it is
valued during the process.

Read the full story.

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