Most Chapter 11 cases are filed in today's economic downturn to sell assets under Section 363(b) of the Bankruptcy Code. This section allows a debtor to sell its assets to a purchaser after notice and a hearing. The purchaser is able to obtain the assets free of any liens or claims of creditors. Many today would argue that if lenders and debtors want to obtain the advantage of Section 363 to sell the debtor's assets, the lenders must "pay the price." During the first five months of 2009, a plethora of Chapter 11 cases were filed in bankruptcy courts throughout the country. Within a few days' filing of the bankruptcy petition initiating the case, the debtor filed a motion seeking to sell substantially all of its assets. Because the bid/sale motion is often filed prior to the selection and organization of an official committee of unsecured creditors, the vast majority of unsecured creditors are not represented at this crucial time.
Pay to Play: Liquidation of Assets Using Chapter 11 Should Provide Unsecured ... Deborah Thorne Business Credit; Jun 2009; 111, 6; Docstoc pg
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