medium · Corporate Credit Analysis
Why might a senior secured lender prefer a Section 363 sale over a long-term plan of reorganization?
- It guarantees the lender will receive post-petition interest regardless of collateral value.
- It eliminates the 'Absolute Priority Rule' for the duration of the sale process.
- It forces the buyer to assume all pre-petition unsecured debt, improving the lender's coverage.
- It provides a faster path to cash realization or direct ownership of the collateral.
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