TWA filed bankruptcy having already identified a buyer and Northpoint filed hoping to find a buyer. Buying assets out of bankruptcy is not new. In fact, this tool has been used quite successfully locally. In 1990, Carl Albert led a group of investors in an acquisition of Fairchild Aircraft through a bankruptcy sale. As a result of that court approved sale, hundreds of San Antonio employees continued to work in the aerospace industry.
Advantages There are many benefits to acquiring assets through bankruptcy.
Generally, a financially troubled company finds that the value of its assets is less than the debts against those assets. Often, there are Internal Revenue Service liens or other governmental claims which make it difficult, if not impossible, to sell assets through normal channels. Section 363 of the United States Bankruptcy Code permits the transfer of assets free and clear of all liens, claims and encumbrances, even if the holders of such claims do not consent to the sale. For example, you might recall that Carl Icahn, former chairman of TWA, has a contract with TWA that permits him to buy discounted TWA tickets, which he resells on a discounted travel web site. The intent of American is to acquire the assets of TWA free of this obligation.