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Bankruptcy Section 363 Sales: Choices and Consequences

Dror Parnes

Finance Department, College of Business, University of South Florida, BSN 3127, 4202 E. Fowler Ave., Tampa, FL 33620 – 5500, USA

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https://doi.org/10.1142/S2010139212500164Cited by:0 (Source: Crossref)

Abstract

We contrast bankruptcy Section 363 Sales with the traditional path of Chapter 11 reorganization and find that among financial institutions, higher measures of creditors' coordination problems favor the Chapter 11 path, while greater profitability, available cash, asymmetric information between shareholders and creditors, and potential growth rate support the choice of 363 Sales. Among the non-financial firms, higher measures of creditors' coordination problem and available cash favor the course of Chapter 11, while greater profitability, liquidity, and asymmetric information support the path of 363 Sales. We further detect that bankruptcy Section 363 Sales exhibits lower direct fees, and it lasts significantly less time than formal Chapter 11 before the final emergence.

Keywords:

JEL: G33, G34

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