Cross-Border §363-Type Transactions: Checklists for Sales of Assets of Distressed Companies Around the Globe

Handling the sale of a company in financial distress presents a multitude of challenges: preserving the value of the assets; maintaining some level of operations; treating creditors, stakeholders, and employees fairly and legally; and contracting for and effectuating the sale of the business in an orderly fashion. These issues are common to the sale of assets of any distressed company, regardless of where it may be located. However, there are additional complications when the entity or its assets are located outside the United States.

The American Bar Association (ABA) Business Law Section publication Using Legal Project Management in Merger and Acquisition and Joint Venture Transactions included a checklist showcasing important items to consider in connection with the sale of assets of a distressed company pursuant to Section 363 of the U.S. Bankruptcy Code. The Mergers and Acquisitions Committee of the ABA Business Law Section (“M&A Committee”) has undertaken a project to provide country-specific commentary to the original checklist for items to consider in the sale of assets by an international distressed company (collectively, the “Reports”). The authors of these Reports are senior lawyers practicing throughout the world who specialize in mergers and acquisitions and insolvency.

The initial tranche of the Reports provides commentary from multiple regions, including Europe (Germany, Italy, Luxembourg, Netherlands, Spain, and the United Kingdom), North America (Canada, Mexico, and the United States), South America (Brazil), and Asia (India, Japan, and Singapore). It is anticipated that additional Reports spanning other regions will be published in the future. The publication of these Reports is an important addition to the legal literature on mergers and acquisitions. In this global economy, it is important that practitioners have a resource that compares, in outline form, the laws of many countries with respect to asset acquisitions.

Each of these Reports seeks to provide such a resource to readers who come across international acquisitions in §363-type scenarios. Section 363 asset acquisitions are a mix of fields between insolvency and M&A. They also present challenges in other areas of the law, which lawyers involved should be prepared to deal with. The jurisdiction where the company is located and its applicable laws and legal system can have a profound impact on how the sale of the distressed company and its assets is structured and managed. In this regard, each of these Reports is an exercise in comparative law, which requires intellectual rigor and an open mind to be able to conciliate U.S. legal concepts with those of other nations.

The Reports provide a preliminary overview of issues arising under each country’s law and should not serve as a substitute for detailed legal research and advice based upon the facts and circumstances of particular transactions. The material is based upon the laws of each country as of November 2023. It is noteworthy that each author is admitted to the practice of law in his/her respective jurisdiction.

This work product was conceived and coordinated by Agustín Berdeja-Prieto initially under the auspices of the M&A Legal Project Management Task Force and its co-chairs at the time, Dennis J. White and Byron S. Kalogerou. Our gratitude to them for their receptiveness and support. Subsequent efforts were completed with the effective and proactive assistance of current M&A Committee chair Michael G. O’Bryan, M&A Committee Legal Project Management Initiative chair Sachin V. Java, and members of the International M&A Subcommittee. Finally, we acknowledge the very able and timely editing assistance provided by Professor Don De Amicis and Schylar Jacobs of Georgetown Law’s Center on Transnational Business and the Law. We sincerely thank them all.