Creditor approval and notice is requisite in respect of all sales of bankruptcy assets pursuant to 11 U.S.C. 363. However, such advance notice and approval creates a disincentive for prospective buyers of judgments held by bankruptcy estates because the process of approval will alert the judgment debtor that an enforcement strategy is being prepared.

The presenter devised a novel method whereby a judgment held by an estate being administered in the Bankruptcy Court for the Southern District of Florida was assigned to a funder/buyer, pursuant to a gagged and sealed order, subject to the condition subsequent of 11 U.S.C. 363 notice and Court approval. This allowed for the requisite steps to be taken on a global basis to enforce the judgment before the judgment debtor was alerted and could take countermeasures.

Thereafter, the buyer implemented a multi-jurisdictional enforcement and “checkmate” strategy that resulted in multi-million-dollar seizures and the issuance of a “global TRO” in respect of the judgment debtor’s intangible property.

Judge Robert Mark, who presided over the estate both approved the new method arranged for the presenter to discuss the approach at a recent bankruptcy symposium to promote its use. The strategy has the potential unlock substantial and significant value for both debtors and potential funders/buyers, and in the Kumar case, resulted in a judgment thought to have little or no value being responsible for making the previously insolvent estate near-solvent.