The use of Section 363 sales as part of the Chapter 11 reorganization process creates investment opportunities for a variety of prospective buyers, including creditors, lenders, and even less traditional investment vehicles, such as private equity funds. Candidates participate in an auction and sale process in hopes of purchasing the assets of a distressed company, free and clear of liens, under the protection of a Bankruptcy Court order and sometimes in less time than it would take to consummate the sale out of bankruptcy.

In addition, Section 363 sales offer protection from fraudulent transfer laws, the ability to assume and assign certain executory contracts and unexpired leases, and a secured creditor’s ability to credit bid. Taken together, these benefits continue to make a Section 363 sale an often-preferred method of acquiring assets.

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