Asset sales that are part of a corporate liquidation require a different marketing approach. Alan Tippie, a member at SulmeyerKupetz, a liquidation firm, says that brokers need to be aware of the features unique to bankruptcy sales to manage and market the properties accordingly. To find out how brokers should manage a bankruptcy sale, we sat down with Tippie for an exclusive interview. Here, he explains how brokers should approach these sales, challenges and what owners should look for in representation.
GlobeSt.com: How should brokers approach the sale of real estate assets that are part of liquidation for clients going through bankruptcy?
Alan Tippie: First, and most importantly for the broker, the broker must be employed by order of the bankruptcy court to be entitled to compensation. The employment arrangement (i.e., listing agreement) should be submitted at the commencement of the representation, not after a buyer has been found. The broker should also familiarize itself with the requirements of a bankruptcy transaction, such as court approval, the need to give notice to creditors and other parties, the possibility of an objection or overbid, and other features unique to bankruptcy sales.
GlobeSt.com: We have seen many retail bankruptcies this year and last year. Has it become more common to see liquidation sales?
Tippie: Liquidation versus ongoing business sales are no more common now. However, the reasons for such sales may have changed. While high interest rates, inaccessibility to financing, and big box competition may have been the root of liquidation sales in prior years, such sales today could be caused by similar factors, but are likely to be tied at least in part to internet competition and on-line sales.
GlobeSt.com: What are the major challenges of these sales?
Tippie: While liquidation sales have many less challenges than ongoing business sales, where conditions to closing include due diligence, acquisition financing and the like, fire sales must meet the test of adequate marketing, the transferability of licenses or leases that encumber the property to be sold, and the need to either satisfy the obligations of parties holding security interests in the assets or gain their consent to the terms of sale.
GlobeSt.com: Do you have a different approach based on asset class? Or is the process similar regardless?
Tippie: Approaches to sales in bankruptcy, just as outside the bankruptcy process, are tied to the type of asset to be sold. The professional retained to market the asset must have sufficient experience and expertise to understand the nuances of the assets to be sold, and must be able to tailor the marketing of the asset so as to reach the most capable prospective purchasers. In bankruptcy, the goal is to achieve the highest net value for general unsecured creditors with less emphasis placed on the satisfaction of claims of creditors secured by liens against the assets.
GlobeSt.com: What should a client going through the bankruptcy process look for in brokerage representation?
Tippie: In or out of bankruptcy, a client should be attentive to the professional capabilities of the broker and its experience in marketing and selling the particular asset to be sold. While experience in bankruptcy sales and transactions is a plus, such experience is not essential as the broker will be guided by other professionals retained by the client in the case, and in particular counsel to the seller.
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Kelsi Maree Borland
