Abstract
In a climate of increasingly few resources and reduced demand, more and more companies are finding themselves in the position of needing to sell substantially all of their assets to satisfy or partially satisfy their secured lender. Sales frequently occur shortly after the filing of a bankruptcy petition under S 363 of the Bankruptcy Code, which allows the assets to be sold free and clear of all liens, claims and encumbrances. The question is what happens if a debtor sells its assets prior to filing a chapter 7 petition and as part of the sale, the purchaser assumes certain liabilities of the seller. This issue appears to be raised in the Meridian Automotive Systems Inc chapter 7 case pending in the US Bankruptcy Court for the District of Delaware in which the trustee has filed complaints seeking to recover transfers made to prepetition unsecured creditors by the prepetition purchaser of Meridian's assets, Ventra Greenwich Holdings Corp and related Ventra entities.