In a ruling that was a surprise to many bankruptcy practitioners and professionals, the refusal by the U.S. Supreme Court on April 24 to grant the writ of certiorari in the case of General Motors v Celestine Elliott et al., riddled with uncertainty what had been almost a sacrosanct principle of bankruptcy law.
Section 363 of the Bankruptcy Code provides that following notice and hearing, a bankruptcy trustee may sell assets of an estate free and clear of liens, claims and encumbrances. Since a debtor-in-possession in a Chapter 11 case has the same powers and authority as a bankruptcy trustee in a Chapter 7 case, this provision is equally applicable in bankruptcy reorganization and liquidation proceedings.
