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Can Bankruptcy Sales Be Free and Clear of Unknown Future Claims?

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January 27, 2015
Client Alert

One of the well-known benefits of bankruptcy is that assets can be sold free and clear of claims and interest in the property. But unknown future claims have presented difficulties for purchasers of assets in bankruptcy sales and courts have struggled to devise a clear rule for dealing with such claims. A Delaware Bankruptcy Court recently issued a decision addressing this subject in the context of asbestos claims in the chapter 11 proceeding of Energy Future Holdings Corp. The court surveyed the evolving case law regarding discharge of unknown future claims and concluded that based on the weight of developing authority, publication notice may be sufficient to satisfy due process requirements and allow for the discharge of future unknown claims.

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