What is Section 363 bankruptcy?
A section 363 (named after the section of the US Bankruptcy Code that authorizes a debtor to sell its assets) is a court-sanctioned sale process for a company in a US bankruptcy case.
What is a stalking horse bid in bankruptcy?
A stalking-horse bid is an initial bid on the assets of a bankrupt company. The stalking horse sets the low-end bidding bar so that other bidders can not underbid the purchase price. The term “stalking horse” originates from a hunter trying to conceal himself behind either a real or fake horse.
What is a debtor in possession reorganization case?
A debtor in possession (DIP) is a person or corporation that has filed for Chapter 11 bankruptcy protection but still holds property to which creditors have a legal claim under a lien or other security interest. A DIP may continue to do business using those assets.
How do you buy assets from bankruptcy court?
How Do You Buy Assets From a Bankrupt Company?
- Tip #1 — A Section 363 Sale is Usually the Way to Go.
- Tip #2 — It May Pay To Be the Stalking Horse.
- Tip #3 — Negotiate With All of the Relevant Constituencies.
- Tip #4 — Focus on the Bidding Procedures in the Purchase Agreement.
What is a topping fee?
In a 363 auction a type of break-up fee that the debtor agrees to pay to an initial proposed purchaser (the stalking horse) if the proposed purchaser is not the prevailing bidder in the auction.
What happens if a company Cannot pay its debts?
If a corporation stops making debt payments as required or stops communicating with creditors, a corporation’s creditors may sue to collect the amount owed. The balance owed for an unpaid debt is often increased to include unpaid interest, collection costs and attorney fees in the civil judgment.
Can you buy a house from someone in bankruptcy?
Written by Attorney John Coble. The truth is, filing bankruptcy doesn’t prevent you from buying a house. A bankruptcy filing can be your first step toward home-ownership. Many real estate agents and mortgage brokers have relationships with bankruptcy attorneys.
Can you buy a house in Chapter 13?
While the trustee must approve the transaction beforehand, you can buy or sell a home while in Chapter 13 bankruptcy. You should be prepared for a lot of extra paperwork and additional time for appropriate approvals, but Chapter 13 should not prohibit you from making these decisions.