Sixth Circuit: Section 363 Sale Not 'Free and Clear' of Creditor's Claims

Buyers generally assume that the multi-page "free and clear" order, which typically follows the sale hearing, will insulate them from any of the seller's current (and often) future liabilities. However, that is not always the case.

12 minute read September 01, 2021 at 12:03 AM
By
Francis J. Lawall and Kenneth A. Listwak
Sixth Circuit: Section 363 Sale Not 'Free and Clear' of Creditor's Claims

The preferred method of acquiring distressed assets from an owner facing significant liabilities is often through a sale under Section 363 of the Bankruptcy Code. In fact, many practitioners today view Chapter 11 as more of a vehicle to convey assets rather than reorganizing around them.

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