14.4. Section 363 Sales

A sale under Section 363 of the Bankruptcy Code is a sale of assets in a bankruptcy case. The Section 363 sale might involve a single asset—a subsidiary, a real estate parcel, a significant piece of equipment, a piece of intellectual property—or a Section 363 sale may encompass essentially all of the bankrupt company’s assets. Despite the difficulty of doing proper due diligence, distressed sales in bankruptcy are often attractive to potential asset buyers because the asset price may be below its market value outside the bankruptcy context. Also, the buyer generally takes the asset free and clear of liens and encumbrances, with the exception of certain environmental and product liability claims.

In a Section 363 sale, the debtor (or trustee, if any) files a motion in the bankruptcy court seeking app