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Bankruptcy Litigation

Successor Liability Claims Constitute a ‘Property Interest’ for Purposes of a 363 Sale In Bankruptcy

In In re Norrenberns Foods, the U.S. Bankruptcy Court for the Southern District of Illinois had occasion to rule on a creditor’s objection to the sale of a debtor’s assets.

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In In re Norrenberns Foods, Case No. 21-30825, (Bankr. S.D. Ill. July 8, 2022), the U.S. Bankruptcy Court for the Southern District of Illinois had occasion to rule on a creditor’s objection to the sale of a debtor’s assets. The debtor had proposed that, under Section 363(f) of the Bankruptcy Code, the sale be free and clear of any third-party interest in the assets. The creditor, a multi-employer pension fund, held successor liability claims against the debtor and asserted that those claims could not be extinguished through a sale of assets under Section 363. After a thorough analysis of the claims asserted by debtor and creditor, the bankruptcy court overruled the creditor’s objections and allowed the sale to be consummated.

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