Bankruptcy Auctions

Bankruptcy practitioners are all well aware that one of the key fundamental principles underlying any bankruptcy case is the maximization of estate value for the benefit of each of a debtor's creditor constituents. Debtors will often attempt to achieve such value maximization through a sale of its assets. But what happens to the sale process ' usually conducted pursuant to very strict, court approved bidding procedures and protections ' if another bidder rides its white horse into the limelight after the 11th hour expressing its willingness and ability to pay more for the assets? Unless and until this issue is resolved by the United States Supreme Court, the answer may very well depend upon which bankruptcy court is overseeing the sale process in question. This article highlights the tension courts face between recognizing the finality of a sale and reopening a sale process if potentially greater value for the creditors exists, and compares how bankruptcy courts in the Southern District of New York and in Delaware have addressed the issue.