Considerations For Purchasing Distressed Assets

Last updated on February 23, 2021

When a business must sell its distressed assets as part of a bankruptcy proceeding, buyers have an opportunity to invest. The buyers may be creditors in the bankruptcy or interested third parties. Either way, buyers need to be aware of the terms involved in these types of sales. If you are considering purchasing distressed assets, make sure you speak with an experienced bankruptcy attorney so you know exactly what to expect.

I am Kell C. Mercer, and I founded Kell C. Mercer, P.C. in order to give clients attentive, personal service throughout proceedings related to corporate bankruptcy. After years as a partner in large law firms, I decided to take that large-firm experience and deliver it to clients through small-firm values and a flexible, reasonable fee structure.

Purchasing From A Business Bankruptcy Proceeding

In most cases, either the business or a bankruptcy trustee can hold a distressed asset sale. In Chapter 7 bankruptcy, the trustee or a creditor will sell any assets identified for liquidation. In Chapter 11 bankruptcy, the business often handles the asset sales. Either one allows investors to purchase the assets free from liens and encumbrances. That does not mean the sale is worry-free, however. I can help you closely examine the terms and conditions, so you enter the sale with complete appreciation for your investment.

Secured Party Sales

In some situations, the creditor can sell a secured asset through foreclosure rights under the Uniform Commercial Code. The sale may be either public or private. Creditors often pursue secured party sales when a business has failed and they are liquidating the assets. They can, however, be used as a restructuring tool in some circumstances. If you are looking to secure an asset this way, I can make sure the sale meets all applicable legal requirements.

Speak With An Attorney Today

The purchase of a distressed asset can be a great investment opportunity, but the process is not always simple. You should have the guidance of a knowledgeable acquisition attorney. I am available to make sure your investment is everything you expect.

To schedule a consultation, please call my Austin office at 512-855-6056 or reach out online.