Nashville arms dealer Sabre finds itself in the midst of a fight over who will end up with the company’s assets. Its principals have been indicted for gun trafficking and are awaiting extradition from the UK.

Not to worry, while the officers may be fighting criminal extradition, the battle rages for the actual assets of the company. Nashville’s daily newspaper, The Tennessean, reports that an Alabama company is ready to purchase the assets for $2.3 Million. E

Obviously this Company has lots of plenty of challenges. It is not likely that it will survive as an operating company. Section 365 of the Bankruptcy Code permits the sale of assets inside the bankruptcy. It may be that the owners are going to attempt to use this provision to liquidate the assets in an orderly fashion rather than having the sale on the courthouse steps.

Chapter 11 bankruptcy is often used to equalize the leverage between a debtor and a creditor after an event of default has occurred. The creditor is concerned only about liquidating its debt. The borrower, however, may also be concerned about paying other creditors, including the Internal Revenue Service whose debt can seldom be discharged in a bankruptcy.

One thing that can be learned from the Sabre bankruptcy is that the creditors don’t hold all the cards. Be careful that your company doesn’t expend all of its assets fighting off your creditors before you engage experience bankruptcy attorney. I’ve helped level the tables by filing bankruptcy for Knoxville and Sevierville based companies since 1983.