1981 Ed., § 28:6-108.
1973 Ed., § 28:6-108.
Uniform Commercial Code Comment
Prior Uniform Statutory Provision:Section 6-108.
Changes: Revised, expanded to include sales conducted by a liquidator on the seller’s behalf, and form of notice added.
Purposes of Changes and New Matter: 1. This section applies only to bulk sales by auction or conducted by a liquidator on the seller’s behalf, as defined in Section 6-102(1)(c). Bulk sales conducted by an auctioneer or liquidator on its own behalf are treated as ordinary bulk sales and are not subject to this section.
2. Regardless of whether the assets are sold directly from the seller to the buyer, are sold to a variety of buyers at auction, or are sold on the seller’s behalf by a liquidator to one or more buyers, a going-out-of-business sale of inventory presents similar risks to claimants. Auctioneers and liquidators are likely to be in a better position to ascertain whether the sale they are conducting is, or is part of, a bulk sale than are their customers. Accordingly, buyers at auctions and from liquidators selling assets of others need not be concerned with complying with this Article. Instead, this Section imposes upon auctioneers and liquidators duties and liabilities that are similar, but not always identical, to those of a buyer under Sections 6-104(1) and 6-107. Except to the extent that this section treats bulk sales by auctioneers and liquidators differently from those conducted by the seller on its own behalf, the Official Comments to Sections 6-105(1) and 6-107, as well as the Comments to Sections 6-105 and 6-106, which those sections incorporate by reference, are applicable to sales to which this section applies.
3. Subsection (1)(d) sets forth the maximum cumulative liability for auctioneers and liquidators “in any one bulk sale,“ which term includes a series of sales by a liquidator. This liability is to be calculated in a manner similar to that set forth in Sections 6-107(4) and 6-107(5). The term “net proceeds of the auction or sale allocable to inventory and equipment” is analogous to the term “net value of the inventory and equipment”; however, the former takes into account the reasonable expenses of the auction or sale whereas the latter does not. Also, the latter is doubled whereas the former is not. The “amount of the portion of any part of the net proceeds paid to or applied for the benefit of a creditor which is allocable to inventory and equipment“ is determined by multiplying the part of the net proceeds paid to or applied for the benefit of a creditor by a fraction whose numerator is the net proceeds of the sale allocable to inventory and equipment and whose denominator is the total net proceeds of the auction or sale. Because the amount of the net proceeds allocable to inventory and equipment is not doubled, the auctioneer or liquidator is not entitled to credit for payments made to the seller.
4. Section 6-107(3) applies to all bulk sales. Accordingly, an auctioneer or liquidator who makes a good faith effort to comply with the requirements of this Article or to exclude the sale from this Article or who acts under a good faith belief that this Article does not apply to the sale faces no liability whatsoever.
Cross-References: Point 1: Section 6-102.
Point 2: Sections 6-102, 6-104, 6-105, 6-106, and 6-107.
Point 3: Sections 6-102 and 6-107.
Point 4: Section 6-107.
Definitional Cross-References: “Assets”. Section 6-102.
“Auctioneer”. Section 6-102.
“Bulk sale”. Section 6-102.
“Claimants”. Section 6-102.
“Creditor”. Section 6-102.
“Debt”. Section 6-102.
“Equipment”. Section 9-109.
“Inventory”. Section 9-109.
“Liquidator”. Section 6-102.
“Net proceeds”. Section 6-102.
“Person”. Section 1-201.
“Seller”. Section 2-103.
“Written”. Section 1-201.