Bankruptcy

Asset Sales in Bankruptcy

By J. Michael McBride

As you may know I enjoy this topic as it is one area where there are plenty of rules/laws in place but the actual events which occur in a bankruptcy sale often push the limits of the rules and they are always unpredictable. (I even wrote a book on the topic of asset sales should anyone share my interest in that subject!) Here is an article on a sale which occurred in Judge Alan Trust's courtroom in New York. "Taking place in a small room of over 30 lawyers, company executives and Department of Justice officials, the bidding process was heated but decorous. The respective parties placed over 90 bids by the end of the six-hour process. The dramatic highlight came after Kent and Care withdrew from the auction, and Outdoor Cycle formed a bidding coalition with Care in an attempt to muscle out deep-pocketed Dorel.

Both Weidberg and his son, Randall Scott, were present for the auction. Though all parties maintained their civility throughout the process, the mood in the room became strained as Weidberg, counsel Andrew Thaler, and a coterie of accountants were forced to leave the auction room numerous times to discuss whether each offer was actually of greater value than the last. Because of the variety of notes, bullet notes and interest arrangements that could accompany each bid, the group was forced to recess to establish a valuation for more complex bids, so that other bidders could up the ante accordingly.

Bidding opened at $2.775 million in cash and increased in increments of $25,000. Though Outdoor Cycle’s one-time pre-auction bid of $5.2-plus million in cash, notes and revenue-sharing would likely have been the most lucrative for the estate over time, Judge Alan Trust ruled yesterday afternoon that Pacific’s all-cash offer of $5 million plus a $220,000 one-year note was best for the involved parties."

Here is a link: http://www.bicycleretailer.com/news/newsDetail/2931.html

Michael

Full post as published by Texas Lawyer Blog on July 20, 2009 (boomark / email).