Whether it is to expand a business or strike a bargain, it is common for companies to practice asset acquisition during bankruptcy. This type of strategic move can make excellent financial sense for a company just starting out as well as for those who are interested in bulk purchases. However, those who pursue this procedure should be aware that the process of navigating asset acquisition during bankruptcy is anything but simple without the representation of an experienced attorney. The legal team at Harold “Hap” May, P.C. has extensive experience in handling the negotiations and eventual closings of asset purchases from bankruptcy estates.
Benefits of Asset Acquisition During Bankruptcy
Most companies become interested in asset acquisition because it is financially beneficial and coincides with the prospective purchaser’s needs. Though the advantages may vary slightly from purchaser to purchaser, the primary benefit of purchasing assets through bankruptcy is a substantial discount, which then provides much-needed capital to the bankruptcy estate. A company that is bankrupt is interested in recouping some green, and for that reason, they may be a motivated seller offering a purchaser a substantial discount.
Potential Roadblocks for Asset Acquisition During Bankruptcy
If a company is bankrupt, it often make sense to allow entities to purchase the company’s materials, depending on the nature of the bankruptcy.. However, in reality it is more complicated than trading cash for a tangible product. Some of the roadblocks that can impede asset acquisition during bankruptcy without the help of an attorney are:
- Creditor influence on negotiations. A person who is owed money by a debtor, usually referred to as a creditor, may seek to claim partial ownership of some of the debtor’s assets.
- Extended timelines. In order for asset acquisition during bankruptcy to be advantageous for a prospective buyer, the assets must usually become available within a certain timeframe. Unfortunately, dealing with the debtor, creditors, and bankruptcy court could all take more time than a purchaser wants to be tolerant of.
- Negotiations with the bankrupt company. A debtor may wish to establish more control over the sale of their assets.
- Bankruptcy court transaction approvals. The official declaration of bankruptcy forces a company to get court approval for any transactions outside the normal parameter of the company’s regular business practices. While the bankruptcy court usually has the final say, transferring non-inventory or significant assets are generally not deemed acceptable.
Trying to sort out how your asset acquisition effort might fare after creditor influence, negotiations, and bankruptcy court takes valuable time that is wasted without an intimate understanding of federal and state bankruptcy laws that surround it.
Enlist the help of a reputable attorney if you are planning on obtaining asset acquisitions during bankruptcy so that the venture can be more successful from the start.
Benefits of Working with An Attorney
A reputable and experienced attorney can make asset acquisition procedures during bankruptcy a much smoother experience. Specifically, legal counsel may be able to:
Provide for a successful asset acquisition
Armed with extensive knowledge of federal and state bankruptcy laws, bankruptcy court procedures, and assumed liabilities, a reputable attorney can successfully navigate the acquisition process with ease and at a faster pace.
Purchasers generally want access to assets that do not come with any strings attached. In other words, they do not want to unwittingly assume liabilities tied to those assets. Our attorneys understand how to help a client make a successful purchase with minimized successor liability uncertainty.
Our legal counsel has experience in “good faith” purchases which typically protects a buyer from having a sale reversed in the case of an appeal.
What to Look for In an Asset Acquisition Attorney
It is necessary to take time to vet proper legal counsel for your specific needs. Since time is often of the essence in asset acquisition during bankruptcy, it can be tempting to hire the first attorney you find that has asset acquisition listed as a service, but that would be a mistake. Finding the right attorney to protect your time-sensitive interests should ultimately help you have more peace of mind and save money in the long run.
It is best to keep the following considerations in mind when looking for legal representation for this type of asset acquisition:
- Asset acquisitions can take all different forms, so it is critical to make your primary focus finding a law firm or attorney with a background and experience in asset acquisitions as it relates to bankruptcy.
- Choose an attorney or firm who has handled bankruptcy asset acquisition cases before with positive outcomes.
- Select representation in the form of a firm that is comprised of multiple attorneys. This enlarges the pool of experience and knowledge considerably, which may yield more effective strategies.