In there a market for commercial property? It may be time for you to become a stalker… er… a “stalking horse”.
With so many companies facing bankruptcy, the courts appear to be increasingly open to a type of bankruptcy-specific asset sale known as a “363 sale” which receives its name from the section of the U.S. bankruptcy code that creates it.
In short, a 363 sale enables the court to to sell off one or more pieces of property owned by a debtor and then assigns the debt against that property to the proceeds of the sale. The net effect is that the purchaser ends up with the property free and clear of all liens and encumbrances.
As with all things concerning bankruptcy, the process requires that a buyer follow very specific procedures and receive approval of the presiding judge. The process begins with a party interested in purchasing an asset in bankruptcy making an offer on the property to the court. This party is called the “stalking horse”. Other bidders can come in and challenge the stalking horse with superior bids, but there is frequently a very strict limit on the amount of time that additional offers will be entertained. This is subject to the presiding judge’s dictates.
When a 363 sale is completed, the successful buyer owns the property without liens or encumbrances. In a way, this makes 363 sales much like foreclosure sales, only this process is completely under the control of the U.S. Bankruptcy Court.
Do you have any experience with 363 sales? If so, tell us about your experience in the space below! Your comments and questions are always welcomed!
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