Article 9 Sale: Case Study

Public Sale of a Distressed Media Company

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A publicly traded digital media company ran out of cash and faced immediate shutdown. With no ability to fund a Chapter 11—estimated at $1.5–$2 million—and no viable restructuring path, the senior secured lender chose a public Article 9 sale under the UCC. CMBG Advisors was engaged to run the process.

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Capital Structure

• Senior Secured Debt: $5 million

• Junior Secured Debt: $3 million

• Unsecured Debt: ~ $20 million

• Public Shareholders: Thousands

• Cash: Essentially none

 

Why Article 9
A Chapter 11 would consume more cash than the company had and provide no pathway to reorganize. An Article 9 sale allowed:

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• Low cost (low six figures)

• 30-day timeline

• Full public marketing

• Secured creditor credit bidding​

 

The Process
CMBG Advisors managed the legally required public sale process: notices, publication, data room, buyer outreach, diligence, Q&A, and bid management. Both secured creditors were eligible to credit bid.

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Outcome
An insider-affiliated entity designated by the senior secured lender submitted the winning bid through a credit bid. The sale:

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• Delivered the assets to the senior lender’s affiliate

• Provided a modest carve-out to the junior lender

• Wiped out all $20 million of unsecured debt

• Eliminated all public shareholders

• Closed quickly and efficiently

 

Result
The secured lender obtained the business through a transparent, commercially reasonable public process. Unsecured creditors and equity holders received no recovery—exactly the outcome that a Chapter 11 liquidation would have produced, but at a fraction of the time and cost.