The First and Third Circuits were recently faced with appeals from sale orders that challenged the finality principle. Two critical facts of the cases were similar: (1) The appellants did not seek a stay of sale order; and (2) the purchasers were designated good-faith purchasers entitled to the protection of § 363(m). Notwithstanding these circumstances, appeals lodged after the closings proceeded in direct contrast to precedent regarding the finality and reliability of bankruptcy court sale orders. Ultimately, both the First and Third Circuits affirmed the sale orders, finding the appeals statutorily moot. But in doing so, a weakness may have been revealed in the bankruptcy court sale-approval process and the finality afforded sale orders that could impact the certainty of and value obtained in future § 363 sales.

In Mission Prod. Holdings Inc. v. Old Cold LLC a former contract party and aggrieved bidder argued that § 363(m) should not insulate a sale order from appeal, even absent obtaining (or even seeking) a stay in cases where either (1) the “good faith” finding itself is challenged, or (2) the aggrieved party is deprived adequate time to seek a stay; or (3) the absolute priority rule was allegedly violated.

Debtors Thane International Inc., et al. (collectively, Old Thane) sold consumer products through a combination of channels, such as direct-to-consumer sales and retail store sales. Like so many in the retail space, Old Thane experienced financial difficulties when television advertising and sales declined. On Oct. 16, 2015, certain senior lenders initiated a proceeding against Old Thane under Canada’s Bankruptcy and Insolvency Act to appoint Richter Advisory Group as a receiver. That same day, 9472541 Canada Inc., 9472550 Canada Inc. and 635427 Inc. (collectively, New Thane) offered to purchase substantially all of Old Thane’s assets.

At this year's Annual Spring Meeting in Washington, D.C., the Asset Sales Committee paired with the Secured Credit Committee to host a session titled Comparison of Asset Sales under Section 363 and Asset Sales Pursuant to a Plan of Reorganization. Speakers for this session included: 

• Thomas A. Buck - EisnerAmper LLP; Iselin, NJ
• Dawn M. Cica - Mushkin - Cica - Coppedge; Las Vegas
• Jeff J. Marwil - Proskauer; Chicago
• Frank A. Merola - Stroock & Stroock & Lavan LLP; Los Angeles

Also at the conference, committee members enjoyed cocktails, networking, and spectacular rooftop views of Washington, D.C. at the Committee Cocktail Reception. Special thanks to GlassRatner and Equity Partners HG for their sponsorship of the event. Thanks also to Kutak Rock LLP for the use of its rooftop deck. It was a good time for all who attended, and we look forward to future networking events with our Committee members.