Bankruptcy Sales
Bad Debt Consolidation by splinder
Filed under Bankruptcy
Are you looking to buy assets at an attractive price? With an increasing number of bankruptcy filers under Chapter 7, bankruptcy sales have almost become a regular market for buyers, who are looking for assets at incomparable prices to expand their property.[br]
Bankruptcy sales process involves the trustee and debtors as sellers and their assets are transferred without any legacy of petitions. This process also provides an opportunity to the trustee (indirectly to the debtors) to transfer contracts and leases that otherwise were forbidden by law, such as mortgages.
Bankruptcy sales, legally, is a pursuant of either section 363 of Bankruptcy code or the liquidation plan. It requires a court’s permission before notices are sent out to all the parties. Usually the notice period is as short as 20 days. However, there are exceptions to it with few courts imposing restrictions on a trustee’s rights so that they can sell assets outside of the process.
Structure of Bankruptcy Sales Process
The bankruptcy sale process involves a variety of ways that include:
· Auctions
· Private sales
· Public sales
Private sales are limited by numbers. However, they are invitation based and usually result in better rates for the assets. Bankruptcy code facilitates sales by offering incentives. The buyers are given the power to pick the contracts that they want to keep. As the whole purpose of bankruptcy sales is to collect as much money as possible, they are organized in ‘any which’ way.[br]
The bankruptcy sales process typically begins with a marketing campaign that attracts buyers. As there are no fixed rules of the sale process, the most viable option of marketing is chosen. An interested buyer thus confirms his intent through a letter or a contingent offer. He outlines the parameters of an acceptable deal and a host of other conditions such as court approvals.
‘Stalking horse’ or the initial bidder usually seeks to get a few restrictions on the subsequent bidding to increase his probability of winning the bid.
On the other hand, debtors or the trustees try to trigger a competition to gain form the bankruptcy sales process. This usually results in a compromise that is documented and presented for the court’s approval.