Buyers Must Plan When Purchasing Real Estate Out of Bankruptcy
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| Christopher R. Vaccaro is an attorney in Reading concentrating his practice on real estate and banking law. |
By Christopher R. Vaccaro
When a bankruptcy petition is filed by or against a debtor, the bankrupt debtor cannot sell real estate without prior bankruptcy court approval. This holds true whether the bankruptcy case arises under Chapter 7 of the Bankruptcy Code (where an appointed trustee liquidates the debtor’s assets and distributes proceeds to creditors), or under Chapter 11 (where the debtor maintains possession of assets while attempting to reorganize its business into a viable operation). A prospective purchaser should take note of Bankruptcy Code requirements when buying commercial real estate from a bankrupt debtor and plan accordingly.
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