Bankruptcy often presents an opportunity for qualified bidders with access to cash to purchase quality assets at bargain prices. However, it also brings a major challenge: How do you assess the value of businesses with risky strategies, dwindling liquidity, limited resources, 不确定的前景? 在考虑低价购买之前, a prudent investor must diagnose the primary cause of distress, evaluate a target company’s overall financial health, 确认其操作是否可以保存, and if so, 承认自己花了这么多时间, effort, 以及让企业扭亏为盈所需的资本.

破产前:谨防欺诈转让风险

Before purchasing assets from a distressed business, it is important to be aware of 欺诈性转让 risk. A 欺诈性转让 occurs if the seller was insolvent at the time of the transaction (or became insolvent as a result of the transaction) and the transaction involved “less than reasonably equivalent value.” Any transfer of assets that occurred within two years prior to the seller’s bankruptcy is at risk of being reclassified as a 欺诈性转让 under federal law, 这意味着交易可能是无效的. 此外，欺诈性转让法在 nearly all states 允许四年的回顾期. During bankruptcy, if the seller’s creditors suspect a 欺诈性转让 has occurred, they may initiate litigation against the buyer to unwind the deal or hold the buyer liable for economic damages. 因为任何破产前的M&交易带有欺诈性转移风险, buyers should proceed with caution when approaching a distressed seller prior to an impending bankruptcy filing.

欺诈性转移

“Less than reasonably equivalent value” is an intentionally ambiguous term that is not defined in the Bankruptcy Code, enabling courts to interpret it on a case-by-case basis. In general, courts will view reasonably equivalent value as not necessarily equal to fair market value 但一般不止一个 fire sale price or 强制清算价值. While reasonably equivalent value may be approximated by 净有序清算价值, such estimates may involve considerable speculation. Since defining these terms requires a subjective judgment by the courts, buyers should analyze and thoroughly document buyer-seller communications and recent comparable transactions to defend against any subsequent 欺诈性转让 accusations by disappointed creditors in a subsequent bankruptcy proceeding.

Overall, buyers should be particularly wary of any sweetheart deals when dealing with a distressed seller. If a deal sounds too good to be true, it probably is! While buying assets from a distressed seller at a pre-bankruptcy auction may reduce 欺诈性转让 risk, acquiring the seller’s assets through a post-bankruptcy 363 sale is the best practice. Even if the buyer expects to ultimately prevail in 欺诈性转让 litigation, the costs, distraction, and hassle of litigation should create a significant deterrent.

Distressed M&A通过363销售效果最好

For companies fortunate enough to have ample cash on hand, a macroeconomic or industry-specific crisis could provide an ideal environment to purchase assets from bankrupt competitors at bargain prices. The main mechanism for such a transaction in bankruptcy is known as a 363 sale because the sale of assets in bankruptcy is governed by Section 363 of the Bankruptcy Code (11 U.S.C. § 101, et seq.). 不同于传统的M&A, distressed M&A via a 363 sale usually involves an all-cash transaction where assets are sold on an “as is, “有限陈述的基础”在哪里, warranties, and escrows.

363销售:购买资产“自由而清晰”

除了避免欺诈性转让风险, the primary benefit of a 363 sale is buying assets “free and clear” of all liabilities, claims, and debts (see 11 U.S.C § 363). The goal for a 363 sale is to obtain the highest and best value for the assets being sold without regard for the validity and amount of pre-bankruptcy liabilities, claims, 以及这些资产的债务. Otherwise, bidders would likely discount their bids subjectively based upon imperfect information and understanding of creditors’ claims.

“Free and clear” does not address certain industry-specific contracts, leases, joint ventures, and other agreements because these are not considered liabilities, claims, 破产法规定的债务. Instead, these types of agreements are governed by a different part of the Bankruptcy Code that permits the seller to (i) assume and assign them or (ii) reject them as part of a 363 sale (see 11 U.S.C § 365). The winning bidder can specify in the purchase agreement which agreements to keep and which to abandon. The seller then assumes and assigns the former and rejects the latter prior to closing.

如果承担和转让，卖方和买方 must cure all defects prior to closing, such as paying any unpaid rent on an office lease. The buyer may 需要满足协议的其他要求, which could entail submitting a deposit or any other credit enhancement. If rejected, then the counterparty to the agreement receives rejection damages as a 一般无担保债权 against the company. 和其他债权人一样, rejection damages are resolved as part of the company’s bankruptcy process. The “free and clear” benefit of a 363 sale means that the 363 sale buyer has no liability for 一般无担保债权s, 包括拒收损害.

However, a company’s ability to reject certain industry-specific contracts in bankruptcy may be less clear than rejecting vendor contracts and equipment leases. 在石油和天然气行业, for example, gas gathering midstream contracts were rejected in a landmark 2016 New York bankruptcy court case (see Sabine Oil and Gas) but upheld in 2019 in cases before a Colorado bankruptcy court (see Badlands Energy)和德克萨斯州破产法庭(见 Alta Mesa Resources).

Additionally, 许可证和专利, a bankrupt licensor cannot reject an intellectual property agreement if the licensee continues to pay royalties required by the agreement before and after the bankruptcy case begins. To resolve ambiguity over whether intellectual property agreements relating to trademarks could be rejected in bankruptcy, the US Supreme Court held that licensors cannot use bankruptcy to reject or revoke trademark licenses where the licensee continues to perform under the agreement (see 使命产品控股有限公司. v Tempnology LLC).

如上所示, contract law, bankruptcy law, 法院判例也在不断演变, creating complexity when determining which contracts can be rejected in bankruptcy as part of a 363 sale. As such, 在363年的拍卖中竞标之前, potential bidders should consult with qualified attorneys to understand how the terms of an underlying contract and the interpretation of applicable state laws can affect their ability to reject certain contracts.

Creditors’ Negotiating Leverage to Influence 363 Sales

Legally, only the bankrupt company can propose a 363 sale. This situation may present a conflict of interest if entrenched management prefers a standalone 重组计划 where the business continues as an independent entity. Creditors possess many options in their toolkit to influence the debtor to commence a 363 sale. Secured creditors can attempt to restrict liquidity for operating in a Chapter 11 proceeding or lift the automatic stay 扣押他们的抵押品. 此外，任何债权人可以 vote 反对任何独立的 重组计划，请求法院解除债务人的债务 exclusive right 提出计划或寻求任命 总重组主任(CRO) or Chapter 11 Trustee. Creditors would hope that such an appointment would remove any conflicts of interest to clear the path to a 363 sale, but they may face new hurdles in achieving their objective.

债权人如何影响363销售

363拍卖:“潜行马”竞标者

Qualified bidders in a 363 sale must submit a binding offer with no contingencies for due diligence or financing. While most 363 sales involve an auction so that valuation is determined by the market, 破产法没有要求拍卖. 在363年的拍卖会上开始竞标, the company may choose an initial bidder known as the “stalking horse.” Once chosen, the company and the stalking horse enter into a binding purchase agreement that sets the minimum valuation for the assets. This purchase agreement is made public so competing bidders have an opportunity to bid higher.

The stalking horse position is usually coveted since this bidder receives a first look at confidential information, 受益于有更多时间进行尽职调查, sets the breakup fee (typically capped around 3% of the bid), and influences the qualification requirements for competing bidders as well as the overall auction timetable. The stalking horse can also influence how the company’s assets are packaged: multiple sales vs. 一笔综合交易. If another bidder subsequently outbids the stalking horse, then the stalking horse can either raise its bid or walk away with the breakup fee. Ultimately, these and other protections allow the stalking horse to entrench its position to purchase quality assets at the best bargain price.

“潜马”投标人的优势

销售:合格投标人

Typically, there are three categories of qualified bidders in a 363 sale:

1. Financial bidders (hedge funds and private equity firms)
2. 战略投标人(竞争对手和新进入者)
3. 信用投标人(有担保债权人)

才有资格投标, interested buyers must demonstrate their financial ability to close a sale if they submit the winning bid. In some cases, bidders may be required to put a refundable deposit in escrow. Usually, deposits are refunded promptly after the auction for everyone but the runner-up bidder in case the winning bidder fails to close as planned.

Financial bidders are known for their rapid decision-making, an especially important trait during bankruptcy as it is often a race against the clock to maintain liquidity. Their appetite for risk-taking and their proven ability to close a deal are other advantages. Usually, financial bidders know the Bankruptcy Code and 363 sale process, making them more attractive buyers for distressed M&A.

Strategic bidders bring their industry knowledge to the table, allowing for expedited due diligence because of their familiarity with the bankrupt company’s customers, products, services, markets, vendors, competition, and regulation. In addition, strategic bidders usually possess valuable synergies with the bankrupt company because they can eliminate duplicative overhead costs, 巩固未充分利用的设施, 获得更大的市场份额, 改善运营效率低下的问题, 总体借贷成本更低.

While synergies should enable strategic bidders to submit higher bids than financial bidders in theory, financial bidders are often able to move faster to become the winning bidder at a 363 sale. Many strategic bidders are unfamiliar with the 363 sale process and have internal hurdles for approving potential bids. Also, strategic bidders may view the bankrupt company as an undesirable, 不值得收购的弱竞争者. Strategic bidders have the alternative of investing in recruiting and marketing to capitalize upon a competitor’s bankruptcy. Therefore, some 363 sale processes seek to limit the involvement of strategic bidders to prevent competitors from obtaining confidential information to use against the company later.

Lastly, 有担保债权人, perfected liens on particular assets are able to “credit bid” using the face value of their debt, regardless of the market value or expected recovery of that debt. Thus, 不提供额外现金, secured creditors are able to set a floor on valuation and prevent opportunistic bidders from getting a sweetheart deal. Therefore, it is important to identify the holders of the secured debt to understand their motivations before proceeding with the bidding process. If the secured debtholders are traditional commercial banks, they are unlikely to want to take the keys and operate the bankrupt company but will not want to allow the winning bid to fall below liquidation value. On the other hand, 如果他们是对冲基金或另类贷款机构, then they may seek to take over the bankrupt company or, if not, may have a lower cost basis in the secured debt that makes a below-par bid from a third party attractive because they can generate a quick gain on the investment.

谁在363拍卖中出价?

销售:信用招标

在大多数363销售过程中, a secured creditor has the right to use the face value amount of its secured debt as currency at auction. A secured lender can use its right to “credit bid” to prevent a borrower from selling collateral at too low a price in a 363 sale, 如低于清算价值. This right has created a “loan to own” strategy in which an investor can purchase secured debt at a discount and then bid up to the face value of that secured debt during the 363 sale auction 不提供额外现金.

A potential bidder may purchase debt of a bankrupt company at a discount with the goal of converting the debt to equity and owning the underlying assets of the business once the bankruptcy process concludes. Investors who have utilized the “loan to own” strategy usually take the following steps: purchase prepetition secured debt at a discount, become the post-petition debtor-in-possession (DIP) lender, roll over prepetition secured debt into the post-petition DIP loan, require a 363 sale where the DIP lender becomes the stalking horse bidder, 坚持加快营销过程, chill the bidding by other interested parties and co-opt parties by requiring a higher breakup fee, and finally, 363年拍卖会上的信用出价.

A successful credit bidder acquires assets at a bargain price because the debt discount reduces the cash required to finance the purchase price. On the other hand, an unsuccessful credit bidder still enjoys a favorable outcome because the winning bid ultimately generates a cash gain for the credit bidder up to the value of its debt discount plus a breakup fee for being the stalking horse bidder.

Conclusion: Astute Maneuvering Leads to Successful Deals

In distressed M&A, interested buyers must navigate unfamiliar concepts, terminology, and processes where experienced financial and legal advice can prove essential. While there are many iterations of ways to participate in distressed M&A, not all transaction strategies result in successful deals. Distressed M&A is best achieved in bankruptcy through a 363 sale to avoid 欺诈性转让 risk. In a 363 sale, there are advantages to becoming a stalking horse bidder, 假设有一场拍卖, 哪些是常见的但不是必需的.

Winning a 363 auction may require outmaneuvering financial bidders, strategic bidders, and credit bidders, who may enjoy unfair advantages of non-cash bidding using secured debt purchased at a discount. Although the winning bidder purchases assets of a bankrupt company free and clear of claims and debts, the purchase agreement should be negotiated carefully to address assumption and rejection of contracts and leases. Ultimately, the reward for successfully overcoming all of the issues and hurdles in distressed M&A是一个潜在的便宜货.