Sarah Schultz Quoted on Stalking Horse Bids in Energy Deals

Hart Energy published “E&P Bankruptcy Sales: Pros, Cons of Stalking-Horse Bidders” and quoted Akin Gump financial restructuring partner Sarah Schultz on the topic of stalking horse bids.

Schultz noted, “If you are the stalking horse it gives you a leg up, allowing you to control the contours of what goes into the asset purchase agreement.”

On the topic of Chapter 11 cases, she said that the very compressed timeline forces potential stalking horses to be prepared to react quickly. She added that the process only really starts when the bankruptcy court approves the procedures, although there is a premarketing process in which the banker asks the buyer if they are interested in purchasing certain assets.

Schultz said, “Once those procedures are approved, that timeline from the date the order is entered until the date that the sale is going to be approved by the bankruptcy court can be very short like 50 days, which isn’t a lot of time for your due diligence. She added that it is not unusual, in Chapter 11, for the process to move “incredibly quickly” because the company often doesn't have the “luxury of liquidity to fund an extended process.”

She closed by noting, “If you want to participate in this space, be prepared to act early, act quickly, and you need to be prepared to act often because you're not always going to be the successful bidder.”