Originally published by the American Bankruptcy Institute: Asset Sales Committee News Letter
In September 2015, the U.S. Court of Appeals for the Third Circuit issued an opinion in In re ICL Holding Co. Inc. that further reinforces the ability to use § 363 sales and settlements to resolve chapter 11 cases.
Factual Background
In 2012, Texas-based LifeCare Holdings, Inc. and its affiliated
debtors (collectively, "the debtor") were struggling
financially, carrying a $484 million debt load, of which
approximately $355 million was secured.1 A group of
secured lenders offered to purchase all of the assets of the debtor
(including cash) for a $320 million credit bid (out of the $355
million of debt that they were then owed), plus $1.8 million in
cash to pay the legal and accounting fees of the debtor and the
unsecured creditors' committee, as well as the debtor's
wind-down costs.2 The cash was to be put into an escrow
account, and any unused amounts were required to be returned to the
secured lenders. In December 2012, the debtor entered into an
asset-purchase agreement (APA) with its secured lenders; the next
day, the debtor filed for bankruptcy.3
Click here to read full article
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
