Case Study: Stone & Webster Asset Purchase

Stone & Webster, a major engineering company in a Delaware Chapter 11 case, offered substantially all its assets for sale to a stalking horse bidder, which had agreed to purchase those assets on certain terms for a certain price, but subject to an auction. If it lost the auction, the stalking horse bidder would be paid a breakup fee.

Frequently, stalking horse bidders demand terms that make it very difficult for competing bidders to bid, and very few competing bidders had won auctions in Delaware as of the time of this sale.

On behalf of a competing bidder, Zack Clement objected to and obtained changes to the exclusionary bidding procedures that would have made it impractical for his client to bid. As result, his client was able to contend in the auction that went on until 4 am, and prevail to buy substantially all of Stone and Webster’s assets. The final $700 million purchase price was more than $100 million higher than the original stalking horse bid.

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