Page 29 - Bankruptcy and Reorganization Services

The 363 process itself is designed to provide a price discovery mechanism within a bankruptcy proceed-
ing. Almost all courts focus on the sufficiency of the process when a sale is challenged by creditors.

However, the 363 sale price is occasionally challenged by the junior classes of claim holders who are
"out of the money" as a result of the 363 sale. These challenges are typically based on a claim that the
intrinsic value fn 6 of the assets or the investment value fn 7 to a particular buyer exceeds the 363 sale
price.

fn 6 According to Gary R. Trugman, the intrinsic value is the "value based on all of the facts and circumstances of the business or in-
vestment." Gary R. Trugman, Understanding Business Valuation: A Practical Guide to Valuing Small to Medium Sized Businesses,
4th ed. (New York: AICPA, 2012).
fn 7 VS section 100 defines investment value as "the value to a particular investor based on individual investment requirements and
expectations."

All VS sections can be found in AICPA Professional Standards.

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