Section 363 Sale

Category: legal

A provision in the Bankruptcy Code allowing a company to sell its assets free and clear of all liens, claims, and encumbrances.

A 363 sale is the "clean break." A buyer purchases the bankrupt company’s valuable assets (like IP, real estate, or specific divisions) without inheriting the company’s massive debt. The cash from the sale then goes to the bankruptcy estate to pay off the old creditors.

Common Examples

• The private equity firm acquired the technology patents through a 363 sale, ensuring they didn’t absorb any of the target’s legacy pension liabilities.
• A 363 sale is often much faster and more efficient than confirming a full Chapter 11 reorganization plan.