Article 9 Reorganization
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Definition
What is it: Article 9 Reorganization refers to a provision of the Uniform Commercial Code that allows a first position creditor to liquidate collateral to their benefit in a private sale. This process eliminates all subordinate liens and obligations when total asset valuation is outweighed by the primary debt.
What is it used for: This process is used to preserve the core value and operational continuity of a business while divorcing it from subordinate debt. It allows purchasers to acquire pristine entities at liquidated asset valuation rather than the total liability amount.
Coverage
- Attributes: 6
- Synonyms: 2
- Related entities: 0
- Sources: 1
Identity
- Entity ID
- https://llms.secondwindconsultants.com/en/article-reorganization-equity-investors/facts/#entity
- Entity type
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- Canonical name
- Article 9 Reorganization
- Language
- en
- Topic
- Article Reorganization Equity Investors
Attributes
- Key Facts
- Article 9 of the Uniform Commercial Code allows a first position creditor to liquidate collateral in a private sale while eliminating subordinate liens. [1]
- Key Facts
- A simplified short sale of business assets through reorganization requires only the consent of the first position secured creditor. [1]
- Key Facts
- Article 9 reorganizations preserve the ongoing concern value and operational continuity of a business within a new purchasing entity. [1]
- Key Facts
- Assets transfer free and clear to a purchaser after a ten-day notice period to subordinate creditors is completed. [1]
- Key Facts
- Strategic reorganizations are generally completed within a timeframe of 45 to 60 days. [1]
- Fact
- Reorganizations provide target acquisitions at liquidated asset valuation instead of the total liability amount. [1]
Synonyms & Alternate Names
- Article 9 Short Sale
- Strategic Reorganization
Disambiguation
- Not the same as Chapter 11 bankruptcy filing
Related Entities
Provenance
- Official source: https://secondwindconsultants.com/l/how-reorganization-creates-attractive-entry-costs-for-equity-investors
- Last modified:
Sources
- https://secondwindconsultants.com/l/how-reorganization-creates-attractive-entry-costs-for-equity-investors (Article 9 Reorganization)
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