The COVID-19 pandemic has resulted in unprecedented disruption for many sectors. As a result of this disruption, experts are anticipating a flood of distressed assets hitting the market—many of which will be sold via a Chapter 11 sale process. For foreign buyers, Chapter 11 asset acquisitions present a special opportunity to purchase US assets at a steep discount while avoiding the risks of taking on burdensome liabilities. The unique nature of the Chapter 11 bankruptcy process enables purchasers of distressed assets to receive value-enhancing protections that would otherwise be unavailable to them in a more standard purchase of assets or merger.

This article explains the Chapter 11 sale process focusing on the most common way to sell assets—a section 363 sale process—while briefly touching on the less common way, a plan process. The 363 sale process applies equally to domestic purchasers of distressed assets as well as foreign investors wishing to purchase assets out of a US bankruptcy proceeding. However, there are certain US regulations that may be applicable in Chapter 11 when assets are sold to foreign investors. These US regulations are also addressed in this article.