Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Recovery of Damages By Bankruptcy Bidders

By Adam C. Rogoff and Noah Falk
January 26, 2006

The sale of a debtor's assets through a bankruptcy court supervised auction process has become more commonplace and, some theorize, under the amended law, may increase in popularity. Often, the process includes the use of a “stalking horse” agreement establishing a baseline of price and other terms for the sale of the assets. In return, the stalking horse bidder obtains certain bid protections (ie, break-up fees and/or expense reimbursements). At the close of the auction, either the stalking horse bidder either places the highest initial (or competing) bid or is outbid, maintaining a claim for the bid protections.

Although it is not common, circumstances can arise where, after the conclusion of an auction and court approval but prior to completion of the sale, the auction may be reopened due to, among other factors, a newly discovered impropriety casting doubt on the validity of the auction. If a court thereafter invalidates the results of the initial auction, what happens to the original highest bidder, which may have incurred certain expenses in preparing to consummate the previously approved sale? At least one court recently ruled that the estate may be held responsible to the initial “winner” for certain closing costs as administrative expenses.

Facts

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Major Differences In UK, U.S. Copyright Laws Image

This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.

Strategy vs. Tactics: Two Sides of a Difficult Coin Image

With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.

The Article 8 Opt In Image

The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.

Removing Restrictive Covenants In New York Image

In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?

The Benefits of Blockchain for e-Discovery and Data Preservation Image

As businesses across various industries increasingly adopt blockchain, it will become a critical source of discoverable electronically stored information. The potential benefits of blockchain for e-discovery and data preservation are substantial, making it an area of growing interest and importance.