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Comment by throwaway85825

18 hours ago

In bankrupty a court appointed liquidator can seize assets and sell them to repay creditors. Of course none of this happened here.

6 comments

throwaway85825

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alasdair_  13 hours ago

They can seize assets that belong to the entity. They can’t seize assets that belong to other people just because it happens to be on their premises, in the same way that they can’t seize and sell the cars that happen to be in a bankrupt store’s parking lot.

  • mcv  6 hours ago

    I saw an analysis from a lawyer who said that there are situations where a creditor can claim consignment items, but that it didn't apply here.

jimnotgym  17 hours ago

They can't sieze consignment stock though?!?

  • munk-a  17 hours ago

    "Can't" is a really bad word to use and I am not certain if "they" here are the corporation or the liquidator.

    If you're talking about the corporation I think that any sensible neutral party would probably come down on the side that the corporation has no entitlement to those goods.

    If you're talking about the liquidator then the goods were held by the franchise so if it went through bankruptcy those goods would be under consideration by the steward - I think they'd usually find that the original owner should be entitled to the goods since they're relatively non-fungible. The proceeds from sold goods are likely a more complicated answer since money is fungible and divisible. I could accept that there would be scenarios where a steward would think that the corporation should recover a portion of the proceeds.

  • benmmurphy  7 hours ago

    I think if the consignor has not taken the correct steps then there is a risk the receiver would be able to pay other secured creditors using the consignors assets. For example if there are other creditors with liens on the inventory then you are meant to take steps to notify them of your claims on the consigned goods because otherwise the consigned goods could look like inventory to the secured creditor (https://www.lowenstein.com/news-insights/publications/articl...)