Doing a case study. The scenario is that the PE shop is looking to purchase a company out of chapter 11. The instructions say that at close of transaction no liabilities should be assumed. Is this every liability (sans new debt) or just cliams to assets? Not too familiar with restructuring stuff so any advice would be appreciated. Thanks.
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if it's a 363 sale you're just buying the assets free and clear of all liens and encumbrances. Thus, ur not assuming any debt of the target nor any trade payables (current liabilities). The sale proceeds less txn fees goto all the creditors (debtholders, mezzanine, unsecured creditors) and the distribution of the assets are made based on the waterfall priority status/pari passu nature of the liabilities.
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