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April 13th, 2009 12:25 PM #1
The Incredible Bulk Sales Law
Okay, maybe only as far as creditors are concerned. Even then … maybe not. Anyway, the Bulk Sales Law (as amended)[1] is there to protect creditors from sneaky debtors who want to unload their assets to keep them away from paying for their debts.
What’s covered
Not all assets are covered though. Only the “sale, transfer, mortgage or assignment” by the debtor of:
a)a stock of goods, wares, merchandise, provisions, or materials otherwise than in the ordinary course of trade and the regular prosecution of the business, or
b)all, or substantially all, of the business or trade, or
c)all, or substantially all, of the fixtures and equipment used in and about the business the law
are subject of the law. (Section 2) Thus, the law contemplates only those doing business, be they individuals or firms.
Who are covered
As to creditors, only those whose claims (whether due or not) existed before the sale, transfer, mortgage or assignment of the assets are protected by the law.
Exemptions
The law specifically exempts from its application the following instances:
a)any sale, transfer, mortgage or assignment by “executors, administrators, receivers, assignees in insolvency, or public officers, acting under judicial process” (Section 8), and
b)when the creditors execute sworn written waivers of the application to them (and their claims) of the provisions of the Bulk Sales Law. (Section 2)
Read the rest on The Legally Inclined Blog.xxx
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