Bankruptcy Going-Out-of-Business Sales: Liquidation Agreements, Creditor Protections, Avoiding Pitfalls

Description

The 2020 COVID-19 pandemic made for one of the busiest years for bankruptcy professionals on record. Many of the chapter 11 debtors that filed during this wave pursued full scale liquidations and, as a result, piecemeal sales of their assets through going-out-of-business (GOB) sales, sales of intellectual property and sales of other assets. Bankruptcy lawyers and restructuring professionals must be prepared for the next wave of cases, which will undoubtedly include a number of fast-tracked GOB sales and other asset sales and a myriad of related issues.

GOB sales in bankruptcy have become such a common occurrence that bankruptcy lawyers and restructuring professionals must understand how these sales work in order to protect their clients. The competing interests of many different stakeholders must be balanced in a very compressed timeframe. The debtor's fiduciary obligations require it to maximize estate assets for the benefit of creditors. At the same time, landlords are entitled to have their leases performed as written, the public has a right to be protected from deceptive trade practices, and other co-tenants and competitors must be protected against unfair business practices. In the case of sales of intellectual property assets, customers who have historically interacted with a brand expect that a buyer of the intellectual property assets, which often include customer data, will continue to provide the customer with similar offerings.

GOB sales tend to happen quickly because of Bankruptcy Code time limits and limits in pre- and post-petition loan documents. Stakeholders unaware of these limits may sit on their rights unintentionally.

Listen as this experienced panel guides bankruptcy counsel and restructuring professionals in understanding GOB sales and sales of additional assets often sold in liquidations, including intellectual property.