Sale Free and Clear - Revision history

Alanfields: /* Finality of Bankruptcy Sales and Appeals */

2022-01-13T16:25:05Z

‎Finality of Bankruptcy Sales and Appeals

Alanfields: /* Finality of Bankruptcy Sales and Appeals */

2019-03-21T23:03:49Z

‎Finality of Bankruptcy Sales and Appeals

Alanfields: /* Sale Hearing and Sale Orders */

2018-09-20T17:38:26Z

‎Sale Hearing and Sale Orders

Alanfields: /* Sale Hearing and Sale Orders */

2018-09-20T17:37:54Z

‎Sale Hearing and Sale Orders

Alanfields: /* Sale Hearing and Sale Orders */

2018-09-20T17:37:12Z

‎Sale Hearing and Sale Orders

Alanfields: /* Generally */

2018-02-17T00:42:01Z

‎Generally

Alanfields: /* Generally */

2017-06-11T19:21:03Z

‎Generally

Alanfields at 23:13, 27 January 2016

2016-01-27T23:13:14Z

Alanfields at 23:11, 27 January 2016

2016-01-27T23:11:59Z

Show changes

Alanfields at 22:34, 27 January 2016

2016-01-27T22:34:47Z

@@ Line 166: / Line 166: @@
 Statutory mootness is based upon 11 U.S.C. § 363(m), which provides that the reversal on appeal of an order approving a sale does not affect the validity of the closing of the sale to the buyer if the purchaser acted in “good faith” and if no stay of the sale was in effect. 11 U.S.C. § 363(m).
-As noted above, the seller and buyer will almost always make a “good-faith” presentation at the sale hearing, seek to obtain a “good-faith” finding in the sale order, and will attempt to have the 14-day stay of Federal Rule of Bankruptcy Procedure 6006(h) waived in an effort to thwart and moot any appeals (i.e., by closing the sale immediately following entry of the sale order and before the buyer can run to the district court or circuit court for a stay pending appeal).
+As noted above, the seller and buyer will almost always make a “good-faith” presentation at the sale hearing, seek to obtain a “good-faith” finding in the sale order, and will attempt to have the 14-day stay of Federal Rule of Bankruptcy Procedure 6004(h) waived in an effort to thwart and moot any appeals (i.e., by closing the sale immediately following entry of the sale order and before the buyer can run to the district court or circuit court for a stay pending appeal).
 Equitable mootness is similar to statutory mootness except that instead of being based on Section 363(m), it is based on equitable principals, and a showing of prejudice to the buyer and seller and the need for finality of sales. The procedure for obtaining a stay pending appeal of a sale order is governed by Federal Rule of Bankruptcy Procedure 8005 and local rules.

← Older revision		Revision as of 23:03, 21 March 2019
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	As a result of the mootness doctrines, a party seeking to challenge the sale must attend the sale hearing and, if unsuccessful, seek to challenge the Section 363(m) findings and/or seek to have a stay of the sale order in place — or else it is highly likely that the buyer and seller can close the transaction and moot the appeal.		As a result of the mootness doctrines, a party seeking to challenge the sale must attend the sale hearing and, if unsuccessful, seek to challenge the Section 363(m) findings and/or seek to have a stay of the sale order in place — or else it is highly likely that the buyer and seller can close the transaction and moot the appeal.

−	--By Neil E. Herman, Morgan Lewis & Bockius LLP	+	--By Neil E. Herman, Morgan Lewis & Bockius LLP [http://www.law360.com/articles/465264/key-elements-of-the-section-363-sale-process Article]

@@ Line 136: / Line 136: @@
 After the bid procedures and bidding protections for any stalking-horse bidder have been approved (at the “first” hearing), and after the auction has been held and a winner selected, there is a second court hearing called the “sale hearing.” At the sale hearing, the seller (the debtor or bankruptcy trustee) will make a presentation to the bankruptcy court summarizing, among other items, the following:
-#. The marketing efforts undertaken, the results of the auction and the winning bid;
+# The marketing efforts undertaken, the results of the auction and the winning bid;
 # The notice given for the auction and sale hearing;
-#. The notice given for the auction and sale hearing;
+# Objections, if any, received to the proposed sale and/or to any cure amounts to be paid to nondebtor parties to leases and contracts being assigned;
 # Settlements, if any, of objections;
-#. Objections, if any, received to the proposed sale and/or to any cure amounts to be paid to nondebtor parties to leases and contracts being assigned;
+# The buyer’s ability to pay the purchase price and to provide “adequate assurance of future performance” (as required by 11 U.S.C. §§ 365(b)(1)(C), (f)(2)(B));
 # The factual and/or legal basis for some of the proposed findings of fact and/or conclusions of law set forth in the proposed sale order (among the key findings that the buyer will request are a “good-faith” finding under 11 U.S.C. § 363(m) and a broad finding that the sale is “free and clear” of liens and claims under 11 U.S.C. § 363(f); and
-#. Settlements, if any, of objections;
+# Full disclosure of any unusual provisions or transactions with “insiders” of the debtor.
 The court will then hear any other parties who support the sale followed by any remaining objectors. Local custom and/or rules will dictate whether the presentations can be by oral argument of counsel, a “proffer” of witness testimony (provided that the witness is in attendance and objecting parties consent to the proffer) or by the process of direct and cross-examination of fact witnesses.

@@ Line 136: / Line 136: @@
 After the bid procedures and bidding protections for any stalking-horse bidder have been approved (at the “first” hearing), and after the auction has been held and a winner selected, there is a second court hearing called the “sale hearing.” At the sale hearing, the seller (the debtor or bankruptcy trustee) will make a presentation to the bankruptcy court summarizing, among other items, the following:
-# The marketing efforts undertaken, the results of the auction and the winning bid;
+#. The marketing efforts undertaken, the results of the auction and the winning bid;
-# The notice given for the auction and sale hearing;
+#. The notice given for the auction and sale hearing;
-# Objections, if any, received to the proposed sale and/or to any cure amounts to be paid to nondebtor parties to leases and contracts being assigned;
+#. Objections, if any, received to the proposed sale and/or to any cure amounts to be paid to nondebtor parties to leases and contracts being assigned;
-# Settlements, if any, of objections;
+#. Settlements, if any, of objections;
-# The buyer’s ability to pay the purchase price and to provide “adequate assurance of future performance” (as required by 11 U.S.C. §§ 365(b)(1)(C), (f)(2)(B));
+#. The buyer’s ability to pay the purchase price and to provide “adequate assurance of future performance” (as required by 11 U.S.C. §§ 365(b)(1)(C), (f)(2)(B));
-# The factual and/or legal basis for some of the proposed findings of fact and/or conclusions of law set forth in the proposed sale order (among the key findings that the buyer will request are a “good-faith” finding under 11 U.S.C. § 363(m) and a broad finding that the sale is “free and clear” of liens and claims under 11 U.S.C. § 363(f); and
+#. The factual and/or legal basis for some of the proposed findings of fact and/or conclusions of law set forth in the proposed sale order (among the key findings that the buyer will request are a “good-faith” finding under 11 U.S.C. § 363(m) and a broad finding that the sale is “free and clear” of liens and claims under 11 U.S.C. § 363(f); and
-# Full disclosure of any unusual provisions or transactions with “insiders” of the debtor.
+#. Full disclosure of any unusual provisions or transactions with “insiders” of the debtor.
 The court will then hear any other parties who support the sale followed by any remaining objectors. Local custom and/or rules will dictate whether the presentations can be by oral argument of counsel, a “proffer” of witness testimony (provided that the witness is in attendance and objecting parties consent to the proffer) or by the process of direct and cross-examination of fact witnesses.

@@ Line 136: / Line 136: @@
 After the bid procedures and bidding protections for any stalking-horse bidder have been approved (at the “first” hearing), and after the auction has been held and a winner selected, there is a second court hearing called the “sale hearing.” At the sale hearing, the seller (the debtor or bankruptcy trustee) will make a presentation to the bankruptcy court summarizing, among other items, the following:
-#The marketing efforts undertaken, the results of the auction and the winning bid;
+# The marketing efforts undertaken, the results of the auction and the winning bid;
-#The notice given for the auction and sale hearing;
+# The notice given for the auction and sale hearing;
-#Objections, if any, received to the proposed sale and/or to any cure amounts to be paid to nondebtor parties to leases and contracts being assigned;
+# Objections, if any, received to the proposed sale and/or to any cure amounts to be paid to nondebtor parties to leases and contracts being assigned;
-#Settlements, if any, of objections;
+# Settlements, if any, of objections;
-#The buyer’s ability to pay the purchase price and to provide “adequate assurance of future performance” (as required by 11 U.S.C. §§ 365(b)(1)(C), (f)(2)(B));
+# The buyer’s ability to pay the purchase price and to provide “adequate assurance of future performance” (as required by 11 U.S.C. §§ 365(b)(1)(C), (f)(2)(B));
-#The factual and/or legal basis for some of the proposed findings of fact and/or conclusions of law set forth in the proposed sale order (among the key findings that the buyer will request are a “good-faith” finding under 11 U.S.C. § 363(m) and a broad finding that the sale is “free and clear” of liens and claims under 11 U.S.C. § 363(f); and
+# The factual and/or legal basis for some of the proposed findings of fact and/or conclusions of law set forth in the proposed sale order (among the key findings that the buyer will request are a “good-faith” finding under 11 U.S.C. § 363(m) and a broad finding that the sale is “free and clear” of liens and claims under 11 U.S.C. § 363(f); and
-#Full disclosure of any unusual provisions or transactions with “insiders” of the debtor.
+# Full disclosure of any unusual provisions or transactions with “insiders” of the debtor.
 The court will then hear any other parties who support the sale followed by any remaining objectors. Local custom and/or rules will dictate whether the presentations can be by oral argument of counsel, a “proffer” of witness testimony (provided that the witness is in attendance and objecting parties consent to the proffer) or by the process of direct and cross-examination of fact witnesses.

@@ Line 9: / Line 9: @@
 #	Proof that all parties having an interest in the property and all creditors whose lien is divested were given proper notice of the motion and hearing.
 #	The court docket showing no objections to the motion, and also that there was no appeal of the order authorizing the sale.
 #	Certified copy of the Order of the bankruptcy court authorizing the sale free and clear of liens and over-ruling any objections that had been filed.
 #	The deed conveying title should state that it is free and clear of liens pursuant to the bankruptcy court order.

← Older revision		Revision as of 19:21, 11 June 2017
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−	However, because of decisions by the United States Supreme Court, WFG will not rely on a bankruptcy court order that property be sold free and clear of liens of the state, a county or a municipality. This includes ad valorem taxes. ~~Fidelity~~ will require that such liens be specifically released by the governmental entity.	+	However, because of decisions by the United States Supreme Court, WFG will not rely on a bankruptcy court order that property be sold free and clear of liens of the state, a county or a municipality. This includes ad valorem taxes. WFG will require that such liens be specifically released by the governmental entity.

	==Key Elements Of The Section 363 Sale Process==		==Key Elements Of The Section 363 Sale Process==

@@ Line 1: / Line 1: @@
 SALE FREE AND CLEAR OF LIENS
 If authorized by the court, property of the bankruptcy estate may be sold by the debtor in possession (Chapter 11 or 13) or by the trustee (Chapter 7) free and clear of liens.  Code, Sec. [https://www.law.cornell.edu/uscode/text/11/363 363](f).  The motion for the order to sell free and clear of liens must be served on all lien holders, and notice of the sale must be given to all parties in interest.  It must be verified that any creditor whose lien is divested received notice of the sale.  The court may order the sale free and clear of all liens, or free of a certain class of liens but subject to others.
@@ Line 13: / Line 15: @@
 However, because of decisions by the United States Supreme Court, WFG will not rely on a bankruptcy court order that property be sold free and clear of liens of the state, a county or a municipality.  This includes ad valorem taxes.  Fidelity will require that such liens be specifically released by the governmental entity.
-Key Elements Of The Section 363 Sale Process
+==Key Elements Of The Section 363 Sale Process==
 Law360, New York (August 20, 2013, 11:54 AM ET) --
-Neil E. Herman %>
+Neil E. Herman %>  Source:  [http://www.law360.com/articles/465264/key-elements-of-the-section-363-sale-process]
-Neil E. Herman
 Section 363 is extremely flexible and each 363 sale can be customized to fit the particular needs and timeline of the debtor and the size and complexity of the transaction. This article contains summaries of key elements of the sale process for a “typical” 363 sale utilizing a public auction procedure since this is the most common procedure used in bankruptcy cases.
 In a typical 363 sale, a debtor or trustee will execute a formal asset purchase agreement (APA) with an initial proposed purchaser whose bid will set both the minimum floor of the purchase price and the proposed structure of the transaction. This initial bid is called the “stalking-horse” bid and will be subject to higher or better offers that may be received at a subsequent auction.

← Older revision		Revision as of 22:34, 27 January 2016
Line 12:		Line 12:

	However, because of decisions by the United States Supreme Court, WFG will not rely on a bankruptcy court order that property be sold free and clear of liens of the state, a county or a municipality. This includes ad valorem taxes. Fidelity will require that such liens be specifically released by the governmental entity.		However, because of decisions by the United States Supreme Court, WFG will not rely on a bankruptcy court order that property be sold free and clear of liens of the state, a county or a municipality. This includes ad valorem taxes. Fidelity will require that such liens be specifically released by the governmental entity.
		+
		+	==Finality of Bankruptcy Sales and Appeals==
		+
		+	Pursuant to Federal Rules of Bankruptcy Procedure 6004(h) and 6006(d), any order approving a sale of property of the bankruptcy estate is subject to an automatic stay of effectiveness of such order for a period of 14 days after entry of the sale order. This is designed to allow any objectors an opportunity to file an appeal or to make a motion for reconsideration.
		+
		+	However, the 14-day stay of sale orders may be shortened (or lengthened) if “the court orders otherwise.” Federal Rule of Bankruptcy Procedure 6004(h). In order to avoid the additional economic burden of paying 14 more days of “carry costs” for the assets, most debtors or trustees routinely request at the sale hearing that the 14-day stay under Federal Rule of Bankruptcy Procedure 6004(h) be waived so that the closing can occur immediately (and a finding supporting the waiver of the 14-day stay would be included in the proposed sale order).
		+
		+	Despite the opportunity for appeals, there is a strong federal policy of protecting the finality of sale orders in bankruptcy, which, in turn, creates certainty in the market and helps maximize the value of the assets. One reflection of this policy of “finality” is provided by the doctrines of equitable and statutory mootness that severely limit the ability of any party seeking to challenge a bankruptcy sale on appeal.
		+
		+	Under either doctrine, the appealing party will generally find its appeal to be rendered “moot” unless the party successfully obtains a stay of the sale during the pendency of the appeal. If not, the closing of the sale will usually provide a basis to dismiss the appeal without the appellate court even addressing the merits of the appeal.
		+
		+	Statutory mootness is based upon 11 U.S.C. § 363(m), which provides that the reversal on appeal of an order approving a sale does not affect the validity of the closing of the sale to the buyer if the purchaser acted in “good faith” and if no stay of the sale was in effect. 11 U.S.C. § 363(m).
		+
		+	As noted above, the seller and buyer will almost always make a “good-faith” presentation at the sale hearing, seek to obtain a “good-faith” finding in the sale order, and will attempt to have the 14-day stay of Federal Rule of Bankruptcy Procedure 6006(h) waived in an effort to thwart and moot any appeals (i.e., by closing the sale immediately following entry of the sale order and before the buyer can run to the district court or circuit court for a stay pending appeal).
		+
		+	Equitable mootness is similar to statutory mootness except that instead of being based on Section 363(m), it is based on equitable principals, and a showing of prejudice to the buyer and seller and the need for finality of sales. The procedure for obtaining a stay pending appeal of a sale order is governed by Federal Rule of Bankruptcy Procedure 8005 and local rules.
		+
		+	As a result of the mootness doctrines, a party seeking to challenge the sale must attend the sale hearing and, if unsuccessful, seek to challenge the Section 363(m) findings and/or seek to have a stay of the sale order in place — or else it is highly likely that the buyer and seller can close the transaction and moot the appeal.