Selling or Liquidating a Business Through a Chapter 11 Bankruptcy Case
A Chapter 11 bankruptcy case is a very effective strategy to sell all or part of an entity’s assets or to control the process of liquidating a business to maximize asset value versus realizing proceeds of a fire-sale through what is called a “Section 363 Sale”.
The reasons for utilizing this liquidation process are numerous. If there is a personal guaranty, the guarantor wants the entity to realize the highest proceeds to minimize and ideally eliminate liability on the guaranty. If the entity is under assault by creditors, an orderly liquidation might not be possible. Also, if an unsecured creditor records an involuntary lien, the entity needs to file a bankruptcy case within ninety (90) days or such unsecured creditor will become a secured creditor.
Selling all or part of the entity’s assets through a bankruptcy case is much more effective in preventing challenges to the sales price that might arise though a bulk sale. For the same reasons noted above, consummating an orderly sale might be difficult if the entity is facing one or more aggressive creditors. Also, the entity does not want the proceeds to go to an unsecured creditor who has filed an involuntary lien. A sale approved by the bankruptcy court provides the entity and the buyer a forum to address any challenges by any creditor regarding any aspect of the sale.
Consult an Experienced Bankruptcy Attorney
Navigating bankruptcy law can be complicated. Make sure you make the right choices with your bankruptcy proceedings and contact the experienced bankruptcy attorneys at Goe Forsythe & Hodges LLP.
Our legal team has years of experience to let you know not only about the bankruptcy process, but also which bankruptcy would be best for your company’s unique financial situation. Contact the bankruptcy attorneys at Goe Forsythe & Hodges LLP at 949.798.2460 or via email today for a consultation.
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