Respondents Divided over Sale Process that Will Return the Most Value of a Bankrupt Company in Latest ABI Poll
Respondents Divided over Sale Process that Will Return the Most Value of a Bankrupt Company in Latest ABI Poll
Contact: John Hartgen
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RESPONDENTS
DIVIDED OVER
July 24, 2007, Alexandria, Va. —Results of a recent American Bankruptcy Institute online poll showed that respondents were somewhat divided over whether or not sales of large companies as going concerns under the §363 process returned far less value to the bankruptcy estate than through a chapter 11 reorganization. The largest number of respondents (46 percent) disagreed that the sale of a large company under the §363 process would return far less value to the estate than a chapter 11 reorganization. Twenty-three percent “strongly disagreed” and another 23 percent “disagreed somewhat.”
Traditionally, the sale of a bankrupt business is completed through a chapter 11 reorganization plan that identifies and deals with each class of creditors and equity-holders, but it can take months or years to complete. A §363 sale, which is much like a controlled auction, can be completed in as little as two to three months and has become a preferred method for sales of distressed businesses.
Thirty-one percent of respondents agreed that sales of large companies as going concerns under §363 return far less value to the bankruptcy estate than through a chapter 11 reorganization. Sixteen percent “strongly agreed,” while another 15 percent “agreed somewhat” that sales of large companies under the §363 process would return less value to the bankruptcy estate than a chapter 11 reorganization. Twenty-three percent of respondents did not know or had no opinion.
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