Stalking horse offer

On October 22, 2007, technology company SCO asked a bankruptcy court to approve a deal whereby a purchaser would acquire "substantially all assets used by the Company in connection with its SCO UNIX Business and certain related claims in litigation."[4] The agreement included a "stalking horse" provision: If the purchaser, York Capital Management, were to be designated as a stalking horse in subsequent bidding for SCO's assets, and if others outbid York, then SCO would have to pay York a $780,000 breakup fee and reimbursement of all expenses incurred by York up to $300,000. In this way, York would earn its expenses and $780,000 by acting as the stalking horse and preventing other bidders from making lowball offers.[5]

On August 4, 2008, Steve and Barry's LLC, a retailer of casual apparel, filed a stalking horse agreement with the U.S. Bankruptcy Court for the Southern District of New York. Their partner in this asset purchase agreement was BH S&B Holding LLC, a subsidiary of Bay Harbor Management.[6]

On July 27, 2009, The Wall Street Journal reported that Telefon AB L.M. Ericsson had won a stalking horse bid to acquire Nortel Networks Corp's CDMA division, for $1.13 billion. [7]

On July 8, 2010, the Texas Rangers Major League Baseball team announced a potential stalking horse deal. "'An auction with a stalking horse, or minimum, bid is more frequently used than a so-called “naked” auction without a floor price,' William K. Snyder, the court-appointed restructuring officer, said. 'Moreover, the stalking horse bidder commonly receives a “reasonable” break-up fee if unsuccessful in the auction,' said Snyder. Under the scrapped plan, the $304 million in cash portion of the Greenberg-Ryan group’s May 24 deal with owner Tom Hicks would serve as a minimum bid, with the next bid at least $20 million higher. Greenberg-Ryan would have received $15 million if it lost." [8]

On February 21, 2011, Reuters reported Blockbuster's intention to pursue a $290 million stalking horse offer with Cobalt Video Holdco. [9]

On April 4, 2011, TechCrunch reported Google's intention to pursue a $900 million stalking horse bid for Nortel's patents.[10]

In 2013, Hostess Brands used a stalking horse auction to sell off its assets in bankruptcy.[11]

On October 17, 2013, Designline, now known as Environmental Performance Vehicles the Charlotte, NC bus manufacturer, used the technique but received no offers. [12]

On April 15, 2013, Eastman Kodak proposed a stalking horse deal of $210 million whereby Brother Industries would acquire Kodak's Document Imaging division ahead of Kodak's bankruptcy court approval slated for June 2013.[13]

On June 10, 2016, Ziff Davis proposed a stalking-horse bid of under US$90 million after Gawker Media announced it was filing for Chapter 11 bankruptcy protection.[14][15][16]

On March 7, 2017, Extreme Networks entered into a stalking horse arrangement for a portion of assets held by Avaya[17] who was currently in Chapter 11 bankruptcy protection at the time. Avaya eventually emerged from bankruptcy protection, making this a rare occasion when a stalking horse auction was not held for assets of a defunct company. The deal was closed on July 17, 2017.[18]

In 2019, Houlihan's Restaurant, Inc. announced a chapter 11 bankruptcy that involves a stalking horse bid by Landry's, Inc.[19]

• Owsley, Henry (2005). Distressed Investment Banking. City: Beard Books. ISBN 1-58798-267-6.
• Hillman, William (2004). Bankruptcy Deskbook. City: Practising Law Institute (PLI). ISBN 0-87224-139-4.