Sales of Not for Revenue Assets following
The Bankruptcy Abuse Reduction and
Buyer Protection Action of 2006
Written by Bill W. Kannel and Adrienne K. Master 1
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P. C. | Boston
Sales of debtors' assets in individual bankruptcy proceedings are very common, possibly as part of an agenda of reorganization or liquidation or pursuant to Individual bankruptcy Code Section 363. The Bankruptcy Code and the Government Rules of Bankruptcy Method provide which a sale of a debtor's assets occurs after notice for all creditors and an opportunity for a hearing. When it comes to a not for profit business (an " NFPвЂќ), the ability of a debtor to sell its assets within a bankruptcy frequently overlaps with assorted state legal guidelines governing NFP asset sales.
The Personal bankruptcy Abuse Avoidance and Client Protection Work of june 2006 (the " Bankruptcy ActвЂќ) signed in to law simply by President Bush on April 20, 2005, will have an instantaneous impact on sales of NFP debtor possessions. While most of the recent changes to the Personal bankruptcy Code will never become effective until October 17, 2005, the amendments discussed thus became effective on Apr 20, june 2006 -- to get both fresh and pending bankruptcy instances. As a result, the alterations the Individual bankruptcy Act built to Bankruptcy Code Sections 363, 541, and 1129 are presently in place and parties involved in personal bankruptcy cases of NFP's should be aware of their presence and program accordingly.
Prior to the amendments, the partnership between the personal bankruptcy law governing asset sales and other relevant nonbankruptcy law governing someone buy of assets by NFPs was below clear. For instance , state regulations often founded procedures, usually enforced with a state's lawyer general, which will governed someone buy of NFPs' assets. Improve notice of the proposed sales might be essential, including details such as the seller's name, price for the assets, as well as the specific the sale arrangement. In addition , condition law may need public...