III. Conclusion

• Jurisdiction: United States

III. Conclusion

Acquiring a company or assets of a financially distressed company can present challenges, but the risks of obtaining favorable acquisition prices are worth investigating the process.³⁵ Good hunting!

Summary Chart: How 363 Sales Differ from Nonbankruptcy Sales³⁶

CHARACTERISTIC	NONBANKRUPTCY SALE	363 SALE
Potential Bidders Sign Confidentiality Agreement	Yes	Yes
Diligence	Yes	Yes (Note, however, that most bid-procedures orders for 363 sales require that formal bids cannot be subject to financing or diligence contingencies. Thus, financing and diligence issues items must be resolved prior to making a 363 sale bid.)
Initial Bidder Submits Term Sheet/Letter of Intent	Commonly used	Commonly used
Use of Formal Asset-Purchase Agreement When Deal Terms Finalized	Yes	Yes
Conditions to Closing	Yes	Very limited; usually includes bankruptcy court approval, but not diligence or financing
Representations/Warranties	Yes	Very limited from seller
Court Approval Required	No	Yes
Board Approval Required	Yes	No
Shareholder Approval Required	Maybe	No
Enforceability of...