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Collier Bankruptcy Practice Guide
Copyright 2016, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

3-43 Collier Bankruptcy Practice Guide 43.syn


Use, Sale and Lease of Property


Editors-in-Chief: Alan N. Resnick;and Henry J. Sommer

Chapter Summary


This chapter, Use, Sale and Lease of Property, examines use, sale and lease of property in the context of Section 363 of the Bankruptcy Code. The chapter provides detailed coverage of the right of the trustee (or debtor) to use, sell or lease property of the estate in the ordinary course of business which had not been covered before the adoption of the Code. The chapter considers the right of the trustee to sell free and clear of existing liens and interests and offer suggestions to both the trustee and creditor concerning the handling of such sales and the distribution of the proceeds. It examines the characteristics of the various types of collateral which will influence the litigation posture of the parties and the attitude of the court where adequate protection of the creditor's interest is required. The chapter also considers suggested mechanisms for settling disputes over collateral use from the point of view of debtor and creditor, and will consider the relationship of such settlements with section 364 which relates to the obtaining of credit and problems of notice to third parties who may be adversely affected by the terms of the settlement.

Specifically, the chapter begins with consideration of sales out of the ordinary course of business including consideration of procedural issues (primarily governed by Bankruptcy Rule 6004), method of sale, objection to the sale, appeals, avoiding a sale, and sales tax. The chapter addresses issues pertaining to sales free of liens including tactics, procedure, opposition to sale free and clear of liens, allocation of the expenses of the sale, and use of the proceeds. The chapter considers sales free of interests. The chapter considers sales in the ordinary course of business, and tactics for sales or use of property in the ordinary course of business including obtaining possession of the property of the estate, the automatic stay, obtaining of credit, after-acquired property clauses, surcharges for preservation of collateral and confirmation and value.

The chapter examines the procedure for sale or use of property in the ordinary course including consideration of evidentiary issues. It addresses the use of cash collateral by a debtor which requires court authorization. It addresses the issue of opposition to the use of property. The chapter discusses specific types of collateral including receivables, inventory, equipment and real property. The chapter considers issues pertaining to negotiated arrangements for use of collateral including the structure of a settlement and notice requirements. The chapter concludes with coverage of appeals of an order denying a request for relief under Section 362.

The Collier Bankruptcy Practice Guide (Matthew Bender) is a strategic and procedural guide, which provides bankruptcy attorneys with a road map for their practice. It covers substantive and procedural law, including amendments to the Bankruptcy Code by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. It provides strategic advice, checklists, forms, and research guides, as well as practice aids, which appear at the end of each chapter. It is organized in the sequence of bankruptcy litigation and highlights issues that arise each step of the way, reflecting the sequence of day-to-day practice. There are contributions from more than 40 prominent bankruptcy attorneys.


Lien,automatic stay,after-acquired property,receivables,bankruptcy,use of property,sale of property,lease of property,trustee,debtor,creditor,adequate protection,collateral use,ordinary course of business,after-acquired property


See Chapter 41 for discussion of adequate protection.

See Chapter 38 for detailed coverage of the automatic stay.

See Chapter 44 for detailed coverage of obtaining credit.

See Chapter 62 for coverage of turnover of property.


See Collier Bankruptcy Manual (Matthew Bender) for definitive section-by-section analysis of the Bankruptcy Code, accompanied by detailed analysis of current rules, case law, and related non-bankruptcy law.

See Collier Compensation, Employment and Appointment of Trustees and Professionals in Bankruptcy Cases (Matthew Bender) for complete examination of the Code provisions, case law and current practice trends relevant to the compensation of attorneys, trustees and other professionals involved in bankruptcy cases, including ethical restrictions on employment and new requirements under local rules or administrative orders.

See Collier Business Workout Guide (Matthew Bender) for practical guidance on how to plan, carry out and complete an effective out-of-court restructuring or "workout."

See Collier Bankruptcy Exemption Guide (Matthew Bender) for a compilation of exemptions available in every state and territory, along with checklists of exemptions; complete text of statutory authority; text of federal non-Bankruptcy Code exemptions; analysis of constitutional problems; tenancy by the entirety issues; current case highlights; and a research guide.
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