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Distressed Assets & Bankruptcy

§363 Sale (Buy Distressed Business Assets Free-and-Clear)

Bankruptcy Code §363 lets you buy a distressed company's assets free-and-clear of liens, at deep discount, in 60–90 days.

Overview

§363 of the Bankruptcy Code allows a Chapter 11 debtor to sell substantially all assets 'free and clear of all liens, claims, and encumbrances' with bankruptcy court approval. Buyer gets clean title, no successor liability, at typically 30–60% of appraised value. Structure as 'stalking horse' bidder with break-up fee (2–3%) to lock deal + get first-look economics. 60–90 day process. Watch: auction can push price up; assumption/rejection of contracts requires careful negotiation.

Best fit
Strategic buyers targeting distressed competitorsPE-style acquirersIndustry consolidators
Estimated impact
40–70% off market value + clean successor liability shield

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