One of the most important tools in the debtor’s toolbox of rights under the Bankruptcy Code is the ability to seek a sale of assets of the estate that are encumbered by liens, and deliver title free and clear of such liens. Section 363 of the Bankruptcy Code sets forth the conditions for such sales out of the ordinary course of business. Section 363 allows debtors to sell property now, and often addresses how the proceeds will be distributed later under a plan of reorganization or otherwise. Over the years, Section 363 sales have become a critical part of the process, and often involve a sale of substantially all of a debtor’s assets.
Today we report on one issue that has come up frequently with some inconsistent rulings—whether the debtor can sell property free and clear of liens if the purchase price does not exceed the face amount of the liens. In In re Bay Circle Properties, Case No. 15-58440-WLH (Bankr. N.D. Ga. Feb. 14), a decision issued by Bankruptcy Judge Wendy L. Hagenau of the U.S. Bankruptcy Court for the Northern District of Georgia, the court held that it could approve a sale even if the price was less than the face amount of the liens.
Facts: Multiple Liens on Real Property
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