By Jessica Kenney Bonteque and Nathan Yeary
Section 363(m) of the Bankruptcy Code protects purchasers of assets in a bankruptcy sale. The rule protects a bankruptcy sale as long as the effectiveness of the order from the bankruptcy court approving the sale is not stayed pending resolution of an objection and the purchaser acts in “good faith.” A recent decision by the Bankruptcy Appellate Panel for the Eighth Circuit extends the protection afforded under Section 363(m) by permitting a purchaser’s “good faith” to be implied from the absence of evidence that the purchaser acted in “bad faith.” However, the dissent concluded that the absence of evidence that a purchaser lacks good faith is insufficient to support an inference of good faith.
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