Paragon Industries, Inc. has asked a federal bankruptcy court in Oklahoma to approve bidding procedures for the sale of substantially all of its assets through an auction process, marking a key step in the company's Chapter 11 liquidation plan.
In a motion filed October 23, 2025, with the U.S. Bankruptcy Court for the Eastern District of Oklahoma, the debtor outlined an extensive sale timeline culminating in a potential auction on January 8, 2026, and a sale hearing on January 14, 2026. The company filed for Chapter 11 bankruptcy protection on May 21, 2025.
The proposed sale represents part of a broader liquidating plan. According to the motion, "The sale and plan, together, will allow the Debtor to resolve this Chapter 11 proceeding quickly and efficiently." The motion indicates that Paragon has already entered into a Plan Support Agreement that contemplates this auction process.
Auction Timeline and Process
Under the proposed procedures, interested bidders would need to submit qualified bids by January 5, 2026, at 5:00 p.m. Central Time. The company has set a 10% good faith deposit requirement for all bids except those from stalking horse bidders.
The detailed bidding procedures include provisions for the selection of one or more stalking horse bidders, who could receive bid protections including breakup fees capped at 3% of the cash component of their bid and expense reimbursements. Any stalking horse selection would require consent from the Official Committee of Unsecured Creditors.
"The procedures and documents set forth herein will establish parameters under which the value of the Debtor's assets may be tested to ensure that the Debtor's estate receives fair value in exchange for the In-Court Sale," the motion states. The company argues that "The Debtor believes the proposed procedures will promote active bidding from seriously interested parties and will dispel any doubt as to the best and highest offer reasonably available for the Debtor's assets."
Stakeholder Oversight and Restrictions
The proposed procedures include several unusual provisions, particularly regarding insiders. All bidders must fully disclose any participation by certain insiders or related entities. Additionally, qualified bidders are prohibited from engaging in undisclosed discussions with these parties during the auction process.
The Official Committee of Unsecured Creditors and Byline Bank are designated as "consultation parties" who must be consulted at key decision points throughout the sale process. The committee's consent is required for major decisions including stalking horse selection and successful bidder determination.
Legal Framework and Justification
Paragon argues that the sale meets the requirements under Section 363(b)(1) of the Bankruptcy Code, which allows debtors to sell property outside the ordinary course of business after notice and hearing when supported by sound business purpose.
"The paramount goal in any proposed sale of estate property is to maximize the proceeds received by the bankruptcy estate," the motion states, citing established bankruptcy precedent. The company argues the procedures will help "maximize the benefit received by the bankruptcy estate."
The assets would be sold "free and clear" of most encumbrances under Section 363(f) of the Bankruptcy Code, with liens and claims either being paid in full, subject to bona fide dispute, or attaching to sale proceeds.
Contract Assumptions and Due Diligence
The motion also seeks approval of procedures for assuming and assigning executory contracts and unexpired leases in connection with the sale. Contract counterparties would receive notice by November 25, 2025, with objections due December 17, 2025.
Due diligence access would be provided through an electronic data room to parties who execute confidentiality agreements. The company reserves the right to withhold commercially sensitive information from competitors.
Next Steps
If approved, the sale notice would be distributed within three business days of the court's order. The company's investment banker, Three Keys Capital Advisors, is managing the marketing process, which has already begun.
The case is being handled by Phillips Murrah P.C., with attorneys Clayton D. Ketter and Jason A. Sansone representing the debtor in Case No. 25-80433-PRT.
The proposed closing date is set for January 29, 2026, assuming court approval and successful completion of the auction process.
This article was prepared using Stretto Conductor, our new AI-powered assistant that's here to help. Stretto Conductor was able to create this summary of a 34 page court filing in less than a minute. Always review the underlying docket filings for accurate information. The information and responses generated by Stretto Conductor may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.