New York Bankruptcy Court Adopts Expansive View of Section 363 Free and Clear Assets Sales

April 08, 2013

In a recent decision, the Bankruptcy Court for the Northern District of New York broadly interpreted the meaning of “interest” in the context of determining the scope of a sale free and clear of “liens, claims, encumbrances, and interests” under section 363(f) of the Bankruptcy Code. “Interest” is an undefined term under the Bankruptcy Code. By adopting an expansive scope of the term “interest,” the court’s interpretation provides better protections to asset purchasers in bankruptcy sales and indirectly, will likely result in higher sale prices for sales under section 363 and therefore maximize the value of the bankruptcy estate for the benefit of creditors.

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