Bidders in Section 363 auction sales face the possibility
that a higher "upset" bid will be considered after the
auction has closed. Whether the courts will allow such late bids in
the pre-confirmation context depends on balancing the competing
policies of maximizing creditor recovery and protecting
bidders' expectations, and the integrity of the process.
Post-confirmation bids are allowed only in extreme circumstances.
The authors discuss the varied outcomes in these cases, and some
steps parties-in-interest should take in light of the possibility
of such bids.
Although reorganization remains the general goal in Chapter 11,
over the last few years the balance sheets for most business
debtors have been so leveraged that an asset sale pursuant to
section 363 is the only viable option. Section 363 sales, as
opposed to other forms of asset dispositions, have become so
popular, in part, because they provide a relatively quick means to
shed burdensome assets. It also
