The normal way bankruptcy auctions go is basically some version of this:
Everyone who wants to bid has to sign an NDA about the assets.
Everyone who signs the NDA can perform their due diligence, look at financial statements and other confidential information about the assets in the auction, to figuratively kick the tires. If there’s actual physical property involved, bidders are generally allowed to physically inspect it (if it’s a tractor, for example, you can bring a mechanic to help sort out the tractor’s condition).
Before the deadline, every bidder submits a secret bid to the trustee.
The trustee evaluates the bids, looks to see which is best, and decides whether the top bids are close enough to hold a live public auction or allow topping bids for the bidders to say “hey you’re only $1 million short from the current top bid, you want to throw more money at this?,” and going around and around until the trustee is sure they’ve gotten the best and final bid from everyone.
The judge is upset that the trustee didn’t really do step 4, which in the bankruptcy process is designed to squeeze out the highest possible price for the sale. The losing bidder says they submitted a lower bid than their absolute top “best and final” they would have, because they thought they’d have an opportunity to improve the bid in a step that never happened.
So they’re going back to do it again. Presumably the trustee will propose a new auction process that explicitly puts out well defined rules on how creditors (like the Sandy Hook families) can credit bid with credit against their own claims, instead of actual cash. They’ll need to calculate exactly how much each dollar of credit bid brings to the non-participating creditors (like Sandy Hook families who don’t want to credit bid), and make sure that for each creditor who isn’t credit bidding gets the most money out of the sale.
I don’t think it’s over. The judge specifically said that he believes the trustee tried to do the right thing, but ultimately didn’t follow a process that was designed to raise the most money.
I’ve been following this closely.
The normal way bankruptcy auctions go is basically some version of this:
The judge is upset that the trustee didn’t really do step 4, which in the bankruptcy process is designed to squeeze out the highest possible price for the sale. The losing bidder says they submitted a lower bid than their absolute top “best and final” they would have, because they thought they’d have an opportunity to improve the bid in a step that never happened.
So they’re going back to do it again. Presumably the trustee will propose a new auction process that explicitly puts out well defined rules on how creditors (like the Sandy Hook families) can credit bid with credit against their own claims, instead of actual cash. They’ll need to calculate exactly how much each dollar of credit bid brings to the non-participating creditors (like Sandy Hook families who don’t want to credit bid), and make sure that for each creditor who isn’t credit bidding gets the most money out of the sale.
I don’t think it’s over. The judge specifically said that he believes the trustee tried to do the right thing, but ultimately didn’t follow a process that was designed to raise the most money.