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Current through October 23, 2012
(a) §§ 28:6-104, 28:6-105, 28:6-106, and 28:6-107 apply to a bulk sale by auction and a bulk sale conducted by a liquidator on the seller's behalf with the following modifications:
(1) "Buyer" refers to auctioneer or liquidator, as the case may be;
(2) "Net contract price" refers to net proceeds of the auction or net proceeds of the sale, as the case may be;
(3) The written notice required under § 28:6-105(c) must be accompanied by a copy of the schedule of distribution (§ 28:6-106(a)) and state at least:
(A) That the seller and the auctioneer or liquidator have entered into an agreement for auction or liquidation services that may constitute an agreement to make a bulk sale under the laws of the District of Columbia;
(B) The date of the agreement;
(C) The date on or after which the auction began or will begin or the date on or after which the liquidator began or will begin to sell assets on the seller's behalf;
(D) The date on or after which more than 10% of the net proceeds of the sale were or will be paid, if the date is not stated in the schedule of distribution;
(E) The name and a mailing address of the seller;
(F) Any other business name and address listed by the seller pursuant to § 28:6-104(a)(1);
(G) The name of the auctioneer or liquidator and an address of the auctioneer or liquidator from which information concerning the sale can be obtained;
(H) A statement indicating the type of assets or describing the assets item by item;
(I) The manner in which the auctioneer or liquidator will make available the list of claimants (§ 28:6-104(a)(6)), if applicable; and
(J) If the sale is in total or partial satisfaction of an antecedent debt owed by the seller, the amount of the debt to be satisfied and the name of the person to whom it is owed; and
(4) In a single bulk sale the cumulative liability of the auctioneer or liquidator for failure to comply with the requirements of this section may not exceed the amount of the net proceeds of the sale allocable to inventory and equipment sold less 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 the inventory and equipment.
(b) A payment made by the auctioneer or liquidator to a person to whom the auctioneer or liquidator is, or believes he or she is, liable under this section reduces pro tanto the auctioneer's or liquidator's cumulative liability under subsection (a)(4) of this section.
(c) A form substantially as follows is sufficient to comply with subsection (a)(3) of this section:
Notice of Sale
(1) __________, whose address is __________, is described in this notice as the "seller."
(2) __________, whose address is __________, is described in this notice as the "auctioneer" or "liquidator."
(3) The seller has disclosed to the auctioneer or liquidator that within the past 3 years the seller has used other business names, operated at other addresses, or both, as follows: __________.
(4) The seller and the auctioneer or liquidator have entered into an agreement dated __________ for auction or liquidation services that may constitute an agreement to make a bulk sale under the laws of the District of Columbia.
(5) The date on or after which the auction began or will begin or the date on or after which the liquidator began or will begin to sell assets on the seller's behalf is __________, and [if not stated in the schedule of distribution] the date on or after which more than 10% of the net proceeds of the sale were or will be paid is __________.
(6) The following assets are the subject of the sale: _______________________.
(7) [If applicable] The auctioneer or liquidator will make available to claimants of the seller a list of the seller's claimants in the following manner: _____________________________________________________________________.
(8) [If applicable] The sale is to satisfy $___ of an antecedent debt owed by the seller to __________.
(9) A copy of the schedule of distribution of the net proceeds accompanies this notice.
(d) A person who buys at a bulk sale by auction or conducted by a liquidator need not comply with the requirements of § 28:6-104(a) and is not liable for the failure of an auctioneer or liquidator to comply with the requirements of this section.
(Dec. 30, 1963, 77 Stat. 716, Pub. L. 88-243, § 1; Apr. 9, 1997, D.C. Law 11-239, § 2, 44 DCR 936.)
HISTORICAL AND STATUTORY NOTES
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.
Prior Codifications
1981 Ed., § 28:6-108.
1973 Ed., § 28:6-108.
Legislative History of Laws
For legislative history of D.C. Law 11-239, see Historical and Statutory Notes following § 28:6-101.
