In the context of Chapter 11 bankruptcy, a stalking horse is a potential buyer who is chosen by the distressed company to make an initial bid for the company's assets. This initial bid sets the baseline for the auction of the assets. The use of a stalking horse in Chapter 11 bankruptcy serves several purposes:

1. Establishing a Floor Price: The stalking horse's initial bid sets a floor price for the assets, providing a benchmark for other potential buyers to submit higher offers.

2. Maximizing Value: By attracting competing bids, the stalking horse process aims to maximize the value of the distressed company's assets, ultimately benefiting the company's creditors.

3. Expedited Sale: The presence of a stalking horse can expedite the sale process by providing a starting point for the auction, potentially leading to a quicker resolution of the bankruptcy proceedings.

4. Due Diligence: The stalking horse may have conducted due diligence on the assets, which can provide reassurance to other potential buyers regarding the quality and value of the assets.

Overall, the use of a stalking horse in Chapter 11bankruptcy is a strategic mechanism to facilitate the sale of distressed assets in a manner that is transparent, competitive, and potentially more advantageous for all parties involved.

March 22, 2024