Private Equity – it’s time to Abandon the 363 Sale – 2

Walking a target acquisition through Chapter 11 and a 363 sale comes with cost, time and even risk. It is no longer necessary. The same objective can be reached with a single, streamlined transaction in a matter of weeks.

As a direct investor in the distressed space, the center of risk, cost and capital deployment inefficiencies over time is subordinate debt. An Alliance with Second Wind will remove all subordinate liens and obligations prior to or through your acquisition.

Our transactional expertise eliminates the need for complex short sales, cram-downs or 363s. Your deals will close faster, with minimalized risk and cost.

Through our unparalleled experience in conducting strategic UCC Article 9 transactions, Second Wind will liquidate distressed business assets into new, pristine purchasing entities while preserving full ongoing concern value and continuity of operations.

When core operational value is preserved, incentives are created for all parties in the transaction. Distressed sellers are incentivized with a path to a successful exit. You enter at the attractive cost of the liquidated asset valuation. Creditors recover maximum value on their collateral.

Incentivize LOIs, increase ROI, streamline closings and acquire add-ons at liquidated asset valuation.

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– A lot of people tend to
lean towards the 363 sale As an option because they feel It is the cheapest way To get in and acquire a business. However, what we find is that the 363 Is riddled with risk. Whether that means
expensive attorney’s fees, Lengthy court hearings as part
of the Chapter 11 process, Or in the end being outbid
as part of the 363 sale. ’Cause while you are allowed To be the stocking horse bidder, It doesn’t mean that you’re
going to be the highest bidder At the end of the day. The Article 9 process is
a alternative to a 363 That obtains the same ends. And what it does is, Is it does it in a private sale model. So rather than having
this be public facing, In which you could be outbid in the end, The Article 9 controlled short sale Happens only between buyer, seller And the first position creditor involved. What that does is it allows us To pre-determine the price Of the acquisition, And only requires no
insubordinate creditors, And there is no other opportunity For the process to be delayed Either by the court proceedings, The Trustee, or the possibility Of somebody else coming in and outbidding The potential purchaser’s current bid On the distressed acquisition. When you purchase the note,

You do get it at a discount, However, when you purchase the assets Through the Article 9
strategic short sale, You are basing that on the Forced liquidation value
of the underlying assets. So, regardless of how deep Of a discount you’re
able to get on a note, It’ll never be greater
than the forced liquidation Value of the underlying asset base. So, by using the Article 9 And targeting the assets Based on your forced liquidation value, You preserve the ongoing operations And the ongoing concerned
value of the business, But at a price point that is commensurate With the forced liquidation value Of the underlying assets. So couple the lower entry cost, Which increases ROI on
each potential transaction With removing the risk, The time and the cost associated With a Chapter 11 363 sale, We find that the Article 9 process Is far superior for most PE professionals. With every situation, There could be a variety of variables That dictate timing. In many cases, we’re able to conclude The Article 9 process in as little as 6 to 8 weeks. The noticing period under
the Article 9 process Is 10 days. Practically speaking, it’s two weeks. Before that there is
some transactional work

That needs to be done, But the entire process should be able To conclude itself in about 6 to 8 weeks Versus 6, 8 10 months or more In a Chapter 11 363 model. If you’re a PE professional Practicing purchasing distressed notes And taking businesses Through pre-packaged 363 sales, I encourage that you reach out And discuss with us how an alliance With Secondwind Consultants can allow you To identify target acquisitions, Bring them to us So that we can re-organize
those businesses In a matter of weeks, And turn them back to you As pristine, new entities In which you can acquire those businesses Without the time, The expense, and the risks Associated with your
current acquisition posture Of using the 363 model.

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