Many Bankruptcy Court orders approving sales under Section 363(f) of the Bankruptcy Code include provisions purporting to make the sales “free and clear” of successor liability. However, it is not always clear that these provisions will be enforced in later actions by third parties against the buyers. There are circumstances where the language of a “free and clear” sale order may not match the reality of whether a buyer will be insulated from future claims, and counsel must be able to structure the transaction to maximize the available protections for a buyer in the Section 363 sales process.

The limitations on sales free and clear of claims was illustrated by the Second Circuit's decision in In re Motors Liquidation Co., where the court did not enforce part of the sale order because some claimants were not afforded adequate notice of the sale. The court's ruling is instructive for future reliance on the Code's free-and-clear provisions.

Listen as this authoritative panel of bankruptcy practitioners as they guide you through the limitations on “free and clear” sales and discuss how language of a “free and clear” sale order may not match the reality of whether a buyer will be insulated from future claims.

WilmerHale Partner George Shuster and Counsel Benjamin Loveland will be featured panelists.