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  "Race to the Courthouse" -
 


     Bankruptcy Filing Can Stop the "Race to the Courthouse": In many situations, a debtor may have numerous creditors who are taking action against him. This is especially true in business cases. The debtor faces the very real possibility of having his assets sold off in piecemeal fashion, through repossession, UCC-1 lien sale, mortgage foreclosure sale, or sheriff's execution sale. Most of the time, this type of sale does not bring in "top dollar", because of the uncertainty involved and the hesitancy of potential buyers to bid at such sales.

Selling of Assets by the Debtor or Trustee

     Many times, there are no bidders other than the foreclosing or selling party, who will simply put in a credit bid and no new cash. A bankruptcy filing allows these same assets to be sold by the debtor or trustee, over a reasonable period of time, and with ample notice to possible interested parties. This can result in a higher sales price for the assets.

 

Business Assets

     Also, business assets can be sold in bulk and as a going concern, which generally will trigger a higher sales price from the right buyer. As a general rule, assets sold at bankruptcy sales do not have issues with title, because, for instance, there is no requirement that such sales comply with state bulk transfer laws.

Written by Henry Rendler





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