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NY Practice Guide: Business and Commercial
Copyright 2017, Matthew Bender & Company, Inc., a member of the LexisNexis Group.
3-18 NY Practice Guide: Business and Commercial 18.syn
Bulk Transfers under the Uniform Commercial Code
Herbert L. Ash, Esq.;Jeffrey R. Leventhal, Esq.
The chapter analyzes the creditor notice provisions of bulk transfer sales law that must be met by debtors in order to provide creditors means to investigate potentially fraudulent transfers, discussing the general rule that a creditor who has not received notice of a bulk sale transfer may proceed in effect as if the sale did not take place. It also notes that even if the transferor/transferee have complied with the bulk sale transfer law, the underlying transaction may still be set aside as a fraudulent conveyance or preference under Bankruptcy law.
The chapter reviews what transfers are covered, noting that a transfer may include a bulk sale through an auction, and exempted under Article 6. It also discusses the requirements that both the transfer be a major part of the seller's inventory as measured either by the quantity of inventory transferred or the monetary value of the transfer and the transfer not be in the ordinary course of the transferor's business. Further, the chapter covers the methods of compliance, outlining the requirements of a) creating a list of creditors and a schedule of property to be transferred, b) providing notice to all of the creditors on the list and to all of the persons known to have claims against the transferor, and c) filing, or otherwise preserving, the list and schedule.
Finally, the chapter outlines alternatives to providing the notice required under Article 6, including 1) obtaining a waiver of compliance from all the creditors, 2) obtaining a bond to cover the creditors' claims, 3) putting a portion of the purchase price in escrow until the statute of limitations has run, 4) having the transferor indemnify the transferee if the sale is invalidated, or 5) paying off the known creditors.
New York Practice Guide: Business & Commercial (Matthew Bender) provides step-by-step guidance on selecting, forming, managing, and dissolving a New York business entity, through a combination of analysis, practical advice, forms, and references to more in-depth research. This publication includes coverage of the impact of the UCC on business entities but also addresses broader business obligations of business entities. Each chapter contains four parts: an analytical Legal Background section, a Practice Guide, a collection of Forms, and a Reference Guide.
bulk transfers,UCC Article 6,fraudulent conveyances,notice of bulk sale transfer,alternatives to compliance with UCC Article 6
RELATED CHAPTERS: (View)
For an overview and analysis of specific business entities, as well as practice guides and forms for use in forming these entities, see Part I, Choosing the Business Entity.
For other topics, as well as practice guides and forms, related to conducting a business entity, see Ch. 9, Securities Offerings; Ch. 10, Franchising; Ch. 11, Financing the Business; Ch. 12, Guaranties of Financial Obligations: Preparation and Enforcement; Ch. 13, Contracting with the State and Local Governments; Ch. 14, Purchase and Sale of a Business; Ch 15, Business Torts; Ch. 16, Letters of Credit; Ch. 17, Sale of Goods Under The Uniform Commercial Code; Ch. 19, Personal Property Leasing: Article 2-A of the Uniform Commercial; Ch. 20, Secured Transactions; Ch. 24, Commercial Arbitration; Ch. 25, The Employment Relationship; Ch. 25A, Workers' Compensation; Ch. 26, Employment Discrimination; Ch. 30, Liquor Licensing; and Ch. 32, Bankruptcy.
OTHER RELATED PUBLICATIONS:
For commentary, complete forms and specific clauses for use in transactions involving sale of a going business, see Warren's Forms of Agreements (Matthew Bender), Ch. 8, Sale of a Going Business.
For additional coverage of New York topics relating to business entities generally, along with detailed checklists and numerous practice pointers, see LexisNexis AnswerGuide New York Business Entities (Matthew Bender), Ch. 13, Buying and Selling Business Entities or Assets.
For additional guidance on legal and tax issues involved in forming, operating or dissolving a business entity in New York, see White, New York Business Entities (Matthew Bender), Ch. 7, Purchase and Sale of a Corporate Business.