Bankruptcy Section 363 Sales: Choices and Consequences

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

Quarterly Journal of Finance (QJF), 2012, vol. 02, issue 04, 1-24

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: Bankruptcy; Section 363 Sales; Chapter 11 reorganization; G33; G34 (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1142/S2010139212500164

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