Liquidating chapter 11 Chinese granny chat
Under section 363(b)(1) of the Bankruptcy Code, “the trustee, after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate.” In approving the sale of assets outside the ordinary course of business and outside of a Chapter 11 plan pursuant to section 363 of the Bankruptcy Code, courts, including those in the Sixth Circuit, have adopted the “sound business purpose” test established by the Second Circuit in Before seeking approval of a transaction pursuant to section 363(b) of the Bankruptcy Code, a debtor must consider its fiduciary duties to all creditors and interest holders for the court to approve the proposed sale.In addition, the bankruptcy court must conclude, from the evidence, that the movant satisfied its fiduciary obligations and established a valid business justification to conduct the sale outside of a plan.
He initiated a lawsuit against the trucking company to recover damages, but it might take months or longer to sort out.
A quick sale of the Company’s assets will preserve the jobs of the Company’s employees, the substantial majority of which will be hired by the buyer.
In addition, a quick sale of the Company’s assets will preserve the going concern value of the Company and will maximize the value of its assets.
This is the process favored by secured lenders to liquidate collateral through a Chapter 11 sale process.
The alternative to section 363 sales in Chapter 11 bankruptcy cases is the sale of assets in a plan of reorganization or plan of liquidation under sections 1123(a)(5)(D) and 1141(c) of the Bankruptcy Code.