Manager Konstantin Danilov Analyzes the Use of Going-Concern Sales in an Article for

March 17, 2017

In an article published on, Analysis Group Manager Konstantin A. Danilov examines the effects of the increasing use of Section 363 sales in Chapter 11 bankruptcies. Section 363 sales are going-concern sales or sales of all or substantially all of the debtor's assets separate from a reorganization plan in a Chapter 11 bankruptcy. Some industry analysts believe that the so-called “hastily arranged auctions” under Section 363 are arranged primarily for the benefit of secured creditors at the expense of other stakeholders, and have undercut valuations in bankruptcy proceedings.

In his article, “Where's the Fire? Viewing 363 Sales Through A Market Lens,” Mr. Danilov takes a close look at the market context for 363 sales and concludes that the increased use of this option is in line with broader trends and does not result in lower valuations. He compares 363 sales to other transactions completed between 1985 and 2013, and also benchmarks the sales using different valuation measures. These analyses indicate that more 363 sales have occurred during periods when companies are relatively overvalued than when they are undervalued — suggesting, he argues, that 363 sales are far from being the fire sales that some are concerned about. In fact, Mr. Danilov concludes, 363 sales may well represent one of the more efficient ways to resolve a Chapter 11 bankruptcy proceeding.

Read the article