A successful sale transaction fundamentally depends on the coming together of a buyer and seller, and is judged based on price, speed and certainty. Distressed sales are no different, but typically involve several issues not generally considered in “healthy” transactions. For example, a sale through Chapter 11 adds complications including the possibility of business disruptions, the perceived stigma that some may attach to the bankruptcy process and increased cost. While a distressed sale can be consummated out-of-court, buyers may prefer to use the bankruptcy code to ensure the sale is “free and clear” of legacy costs and obligations. For the seller, this may have the added benefit of enhancing the value proposition due to contracts that can be rejected in bankruptcy.
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