Bankruptcy Asset Sales During COVID-19 Crisis

The COVID-19 pandemic is already leaving its mark on the bankruptcy asset sale landscape. Some going-concern and liquidation sales have been suspended or cancelled. Debtors have struggled to market their assets, both pre- and post-petition, in the face of unprecedented disruption and uncertainty. Despite this uncertainty — or even because of it — bankruptcy should still be viewed as a useful tool to effectuate the acquisition of assets. The current situation and anticipated distress across many industries presents opportunities for purchasers to acquire assets on favorable terms. The benefits to the purchaser of, among other things, receiving the assets free and clear of liens, claims and encumbrances and the ability to cherry pick executory contracts caught the attention of financial and strategic acquirers for quite some time. However, each industry presents unique issues that should be considered when weighing bankruptcy as an option and, if a case is already pending, a bid for or acquisition of assets of a debtor.