How long does a Section 363 commercial real estate sale typically take to close?

From filing the sale motion to closing, typically 60 to 90 days. The process includes a bidding procedures hearing (2-4 weeks after filing), a marketing period, an auction (if competing bids), and a confirmation hearing. Expedited schedules are possible for assets with strong buyer interest and cooperative courts, sometimes compressing to 45 days.

What is a break-up fee in a 363 sale and how much should I negotiate?

A break-up fee is the compensation paid to the stalking horse bidder if the court approves a higher competing bid. Standard range is 2-3% of the stalking horse purchase price, plus expense reimbursement up to an agreed cap. Courts will reject break-up fees they view as excessive or as a deterrent to competitive bidding, 3% is typically the ceiling courts will approve for commercial real estate.

Does a 363 sale clear all liens on the property?

It clears most liens and claims that were properly noticed to all creditors before the sale hearing. Liens that were not properly noticed, certain tax liens with super-priority status, and regulatory obligations (environmental enforcement orders, code violations) may not be cleared. Your bankruptcy counsel and title company must audit what the specific sale order will and will not extinguish.

Can I finance a 363 sale acquisition with debt?

Yes, but the financing must be committed and closeable within the court-ordered closing timeline. Courts will not delay a confirmation order waiting for a buyer to arrange financing. Many sophisticated 363 buyers close with equity or bridge capital and arrange permanent financing post-close. If you intend to use acquisition financing, your lender must have completed underwriting and issued a commitment letter before the auction.

What types of commercial real estate most commonly go through 363 sales?

Hotel and hospitality portfolios, large mixed-use developments, retail centers with significant debt loads, office buildings with major occupancy issues, and multifamily portfolios held by over-leveraged operating companies. Any commercial real estate asset owned by an entity that files Chapter 11, rather than the real estate entity itself, can potentially be sold through a 363 process.

How to Buy Real Estate in Chapter 11 Section