In the business world, risk can never be eliminated. Companies that have not been as successful as their competitors may eventually face the unpleasant experience of bankruptcy. On the one hand, it is a rather unpleasant experience, but on the other hand, it opens up new opportunities (although quite often only competitors can take advantage of them). It opens up legal options for buying assets of a bankrupt company if the bankruptcy proceeds under the famous section 363 of the United States Bankruptcy Code. Find out how the whole procedure is carried out, and what tools are needed to carry it out, in this article.
Peculiarities of assets sale in bankruptcy
The above-mentioned article 363 describes the procedure for the sale of assets of a bankrupt company quite clearly and consistently. The whole process consists of several stages:
- First of all, the debtor himself offers to buy the assets of his company. The search for possible buyers is conducted by the debtor himself. It is worth bearing in mind that the search for buyers may take some time, but in the end, the debtor must choose the buyer who will offer the best price for all the company’s assets.
- The debtor and the buyer then sign a sale and purchase agreement. Such an agreement must take into account all the nuances of such a transaction and have detailed terms and conditions. After the most acceptable option has been drafted, a preliminary agreement is signed between the debtor and the buyer.
- The bankruptcy court must approve the sale agreement for the assets of the bankrupt company. The court not only has to approve the agreement itself, but also the public auction procedure under which the sale transaction will take place. The debtor is given the opportunity to apply for an accelerated public auction procedure.
- Once the court has approved the sale procedure, the possible bidders are notified accordingly. They must then apply for participation within a set period of time. The important point is that it is at this stage that the debtor must provide a full due diligence assessment so that future buyers have an opportunity to become familiar with it.
- Bidding. At this stage, the debtor chooses the bidder who offers the best price and terms for the purchase of the assets.
- Once the auction is completed, court approval for the sale of the assets must be obtained. It is at this stage that the court needs to provide convincing arguments for selling the assets to the winner of the auction, rather than handing them over to creditors.
As you can see from this description, the most important thing in the sale procedure is to obtain court approval. Only then can the transaction be consummated.
What tools are needed for the sale of assets under Article 363?
virtual data room companies offer a wide range of tools that will be useful in preparing for an asset sale. In particular, they can be used to:
- Drafting a due diligence assessment;
- Checking the condition of the assets of a bankrupt company;
- Exchange of necessary documentation.
It is also possible to collect and store all documentation – both drafts and approved options – in one place, giving access to all interested parties. This will not only help reduce resources for the asset sale procedure but will also save time in preparation and direct execution.