ITH A NOTABLE exception, there has been a significant downturn in M&A deal flow: the value of announced deals in 2001 was less than half that in 2000. This exception is M&A in bankruptcy, meaning the acquisition by purchasers of companies, or parts of companies, in bankruptcy cases. Nationwide, business bankruptcy filings in 2001 were up 13 percent compared with 2000, and in the Southern District of New York, the increase in the same period was substantially greater – more than 55 percent. With such a substantial increase in business bankruptcies, particularly in New York City, opportunities to acquire businesses in bankruptcy are significant.
Although there are several techniques available for the acquisition of companies in bankruptcy, including pursuant to a plan of reorganization, this article will discuss the purchase from the debtor company of assets pursuant to �363 of the Bankruptcy Code.[1]� This is a technique often seen in chapter 11 cases and is the approach by which an M&A lawyer with some bankruptcy transactional experience, working together with a lawyer with a more specialized bankruptcy practice, can provide the most value to the transaction and the client.
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