William Schwartz, a partner in the Banking & Finance Service Group, was quoted in a recent article on PR Web.com. The article, "Lenders Beware: Is Your Article 9 Sale Commercially Reasonable?" discusses the recent survey conducted by DailyDAC, which suggests that buyers of distressed assets are not likely to see auction notices in general circulation newspapers. Given legal requirement for Article 9, lenders must consider other vehicles for advertising.
From the Article:
A recent poll, according to DailyDAC, suggests that the majority of buyers of distressed assets do not regularly search newspaper ads for public notices of sales or similar auctions held by trustees, assignees, and receivers. This raises the question of whether such sales are at risk of attack as not being "commercially reasonable,” as required by the Uniform Commercial Code, Chapter 128 in Wisconsin, and similar statutes that govern such sales.
According to Bill Schwartz, a partner with Levenfeld Pearlstein in Chicago who represents lenders nationally, “the goal of an Article 9 sale is to try to bring in as many bidders as possible. Given that this survey suggests that publishing in a newspaper alone may not be as effective at this as generally presumed, supplementing notice by also publishing in DailyDAC is an easy way to help make sure that the sale is, indeed, reasonable and may help attract more bidders. Unlike a general circulation newspaper, DailyDAC is read by PE sponsors and other buyers who have self-identified as being interested in bidding on distressed sales.”
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