What is a Stalking-Horse Bid?

How long does a 363 sale take?

Section 363 sales can move quite quickly from the commencement of the bankruptcy case to completion, particularly when the debtor has identified a stalking horse bidder before the filing. In many cases, a sale can be consummated within 60 days after the filing.

What is a topping fee?

In a 363 auction a type of break-up fee that the debtor agrees to pay to an initial proposed purchaser (the stalking horse) if the proposed purchaser is not the prevailing bidder in the auction.

What is overbid protection?

What is that? The short and easy answer is that an overbid is an auction conducted during a hearing to approve a bankruptcy sale. You see Bankruptcy Code 363 authorizes a debtor-in-possession or Trustee, to sell property of the estate other than in the ordinary course of business.

How does debtor in possession financing work?

Debtor-in-possession (DIP) financing is financing for firms in Chapter 11 bankruptcy that allows them to continue operating. The lenders of DIP financing take a senior position on liens of the firm’s assets, ahead of previous lenders.

What is a Stalking-Horse Bid?

Is a stalking horse bid binding?

For example, if no one shows up at the auction, the stalking horse may wonder if it overbid for the assets. Once the bankruptcy court approves the stalking horse agreement, it becomes binding on all parties and difficult, if not impossible, to renegotiate.

What is a stalking horse law?

A stalking horse is a person who works to promote a challenge on behalf of and for the benefit of an anonymous third person whose identity remains a secret.

Why is there a bid offer spread?

Bid-ask spread trades can be done in most kinds of securities, as well as foreign exchange and commodities. Traders use the bid-ask spread as an indicator of market liquidity. High friction between the supply and demand for that security will create a wider spread.

Who gets paid first in Chapter 11?

If a company goes into liquidation, all of its assets are distributed to its creditors. Secured creditors are first in line. Next are unsecured creditors, including employees who are owed money. Stockholders are paid last.

How is bid cover calculation?

In general, it is used for shares, bonds, and other securities. It may be computed in two ways: either the number of bids received divided by the number of bids accepted, or the value of bids received divided by the value of bids accepted. The higher the ratio, the higher the demand.

What is a cover bid in finance?

noun. the act of tendering an artificially high price for a contract, on the assumption that the tender will not be accepted.

What is an Article 9 sale?

Generally, a secured creditor may seek to enforce its rights on its collateral upon a borrower’s default. A secured creditor’s remedies include an Article 9 sale, the right to sell the collateral to a third party in a private or public sale without judicial proceedings.

What is deep financing?

At its heart, deep-tier financing is a simple concept. It’s about leveraging business relationships to unlock access to cheap finance for every supplier, not just the first tier. That means taking those first tier supplier financing options and making them available to tier two, three and four sellers.

What is a Section 363 sale?

A 363 Sale refers to the sale of an organization’s assets. Examples include property, plant, and equipment. Tangible assets are under Section 363 of the US Bankruptcy Code. The sale enables debtors to fulfill their obligations to creditors. by selling their assets and using the funds collected to settle their debts.

Why is it called a stalking horse?

The term stalking horse is borrowed from hunters, and it was used to describe a scenario when hunters would hide behind their horses as they moved closer to the prey.

Who owns the stalking horse?

Under the scrapped plan, the $304 million in cash portion of the Greenberg-Ryan group’s May 24 deal with owner Tom Hicks would serve as a minimum bid, with the next bid at least $20 million higher. Greenberg-Ryan would have received $15 million if it lost.”

What is a dip in restructuring?

Companies that enter into Chapter 11 reorganization contin- ue to be run by their existing management in virtually all cases. The ongoing entity is known as the debtor in possession, or DIP.