Stalking horse offer

Stalking horse offer

A stalking horse offer (also known as a stalking horse agreement) refers to an attempt by a debtor to maximize the value of its assets as part of (or before) a bankruptcy court-approved auction process.

Procedure

While entering a stalking horse offer, the debtor can offer bidding protections such as breakup fees to its best bidder before the auction. These incentives enhance the value of the offering for the bidder which might lead to a better price offer before the auction begins. This higher offer is now the starting offer for the auction and may result in benefiting the debtor and its estate.

Examples

On 4 August 2008, Steve and Barry's LLC, a retailer of casual apparel, filed a stalking horse agreement with the U.S. Bankruptcy Court for the Southern District of New York. Their partner in this asset purchase agreement was BH S&B Holding LLC, a subsidiary of Bay Harbor Management. [ [http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20080804006183&newsLang=en "Steve & Barry’s® Files “Stalking Horse” Agreement"] , from Businesswire.com, 4 August 2008.]

References

*cite book | last = Owsley | first = Henry | title = Distressed Investment Banking | publisher = Beard Books | location = City | year = 2005 | isbn = 1587982676
*cite book | last = Hillman | first = William | title = Bankruptcy Deskbook | publisher = Practising Law Institute (PLI) | location = City | year = 2004 | isbn = 0872241394


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