Businesses in Idaho and around the country that are struggling to pay creditors may reorganize their debts or liquidate assets to resolve the situation. When selling assets presents the best course, a debtor may prefer a 363 sale. Named after U.S. Bankruptcy Code Section 363, this auction allows you, acting as the debtor-in-possession, to have some control of the process.
Setting the minimum bid
When you can attract multiple interested parties who want to buy your assets, you obtain their bids. The entity that offers the most becomes the stalking horse bidder. This high bid establishes the minimum bid price once the asset goes to public auction.
Preparing the asset purchase agreement
Once you know who is willing to pay the most, you and that party will draft a purchase agreement that will need to be approved by the bankruptcy court. You have the power to grant the stalking horse bidder special terms as long as the court agrees with them.
Creditors may also participate in the auction. They usually due this if certain assets were held as collateral against their loans. When that is the case, they may bid the amount of the outstanding loan balance.
Finishing the auction
The bankruptcy court regulates the auction process by approving the terms and duration of the bidding. The length of the auction varies case by case. After all bids have come in, you reveal the information and publicly select the highest bids. The transparent procedures promote fair prices so that a debtor-in-possession cannot liquidate for extreme discounts.
Creditors have the right to protest actions during the auction if it undermines their interests. The bankruptcy court reviews objections and either denies or approves them. Upon resolving all issues, the court transfers assets to the new owners.