Are quick asset sales to resolve bankruptcy a good or bad thing? The issue of whether Section 363 of the bankruptcy code, the section that permits quick asset sales, is in need of reform was first raised by the American Bankruptcy Institute’s Commission to Study the Reform of Chapter 11 (the “Commission”). In its 2014 report the Commission pointed to the increased use of 363 sales and the increasingly fast pace at which they have been completed, and concluded (based on anecdotal evidence) that these two factors lead to systemic undervaluation of companies to the detriment of junior creditors.
This week the LSTA hosted the fourth installment of our quarterly roundup of Recent Developments in Bankruptcy Law. Rich Levin of Jenner & Block once again focused on a number of recent key cases for loan market participants. Among the most interesting issues was the “extraterritorial” reach of the avoiding powers of Section 547 of the bankruptcy code.
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Membership in the LSTA offers numerous benefits and opportunities. Chief among them is the opportunity to participate in the decision making process that ultimately establishes loan market standards, develops market practices, and influences the market’s direction.