Distressed Assets Offer Opportunities for Savvy Buyers

Navigating the legal and financial landscape of distressed acquisitions can unlock substantial value.

Published on Feb. 10, 2026

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Buying distressed assets, claims, and securities during periods of market distress can present significant opportunities for buyers willing to understand the risks and move quickly. Experts explain that distress in industries like real estate, retail, healthcare, and automotive often leads to assets becoming available at a fraction of their prior value, creating breathing room and strategic openings for buyers. However, successfully navigating distressed acquisitions requires careful consideration of capital structure, legal risks like fraudulent transfer and successor liability, and deal strategies like loan-to-own, cross-conditional tender offers, and Section 363 sales.

Why it matters

In times of economic uncertainty and industry disruption, distressed assets can be acquired at steep discounts, allowing buyers to capture value, repurpose underperforming businesses, or gain strategic footholds they could not afford in normal markets. However, distressed acquisitions also carry significant legal and financial risks that must be carefully managed.

The details

Distressed opportunities generally arise from either within a bankruptcy process or outside of it. Bankruptcy offers more structured and predictable paths to purchase assets 'free and clear' through Section 363 sales, Chapter 11 reorganizations, or Chapter 7 trustee sales. But non-bankruptcy options like out-of-court workouts, assignments for the benefit of creditors, and Article 9 secured-party sales can be quicker and more private, though they lack the legal protections of bankruptcy. Buyers can deploy strategies like loan-to-own, cross-conditional tender offers, PIPE or second-lien investments, and sponsoring Section 363 sales or reorganization plans. However, key risks include fraudulent transfer claims and successor liability for certain obligations like union contracts, pension liabilities, and environmental issues.

  • Distressed opportunities often arise when industries like real estate, retail, healthcare, restaurants, or automotive struggle.

The players

Peter Amend

A lawyer at Alston & Bird who notes that 'Distressed assets can present opportunities to buy low and sell high, if you understand the risks and can move quickly.'

Jonathan Friedland

An attorney at Much Shelist who explains that 'The fulcrum security is simply the point in the capital structure where recovery stops. Whoever holds that piece usually controls the restructuring.'

Richard Corbi

A lawyer at the Law Offices of Richard J. Corbi who states that 'A bankruptcy court order gives buyers comfort because everyone with an interest gets notice and a chance to object. This cleanses the sale and reduces the risk of future challenge.'

Thaddeus D. Wilson

An attorney at King & Spalding LLP who cautions that 'courts will not approve a sale that benefits only the senior lender or buyer without leaving something for other stakeholders.'

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What they’re saying

“Distressed assets can present opportunities to buy low and sell high, if you understand the risks and can move quickly.”

— Peter Amend, Lawyer, Alston & Bird (natlawreview.com)

“The fulcrum security is simply the point in the capital structure where recovery stops. Whoever holds that piece usually controls the restructuring.”

— Jonathan Friedland, Attorney, Much Shelist (natlawreview.com)

“A bankruptcy court order gives buyers comfort because everyone with an interest gets notice and a chance to object. This cleanses the sale and reduces the risk of future challenge.”

— Richard Corbi, Lawyer, Law Offices of Richard J. Corbi (natlawreview.com)

“Courts will not approve a sale that benefits only the senior lender or buyer without leaving something for other stakeholders.”

— Thaddeus D. Wilson, Attorney, King & Spalding LLP (natlawreview.com)

The takeaway

Distressed acquisitions require careful navigation of legal and financial risks, but can unlock substantial value for buyers willing to move quickly and understand the complexities of capital structures, bankruptcy processes, and successor liability. By starting small, developing relationships with bankruptcy professionals, and conducting thorough diligence, buyers can seize opportunities amidst market disruption.