Seventh Circuit Bars Bad Faith Asset Buyer Protection

In "Seventh Circuit Bars Bad Faith Asset Buyer Protection," an article published in the June 2022 edition of The Bankruptcy Strategist, Michael L. Cook discusses how purchasers enjoy strong protections under the Bankruptcy Code, as long as they are acting in good faith.  

“Good-faith purchasers enjoy strong protection under [Bankruptcy Code (“Code”)] § 363(m),” but the silent asset buyer (“B”) with “actual and constructive knowledge of a competing interest” lacks “good faith,” held the U.S. Court of Appeals for the Seventh Circuit on April 4, 2022. Archer-Daniels-Midland Co. (“ADM”) v. Country Visions Cooperative, 2022 WL 998984 (7th Cir. Apr. 4, 2022). Affirming the lower courts’ denial of B’s motion to enforce a “free-and-clear sale” provision in a plan confirmation order, the Seventh Circuit cited the bad faith of both the debtors and B, the asset purchaser.