Taking the Mystery Out of Bankruptcy Auctions
Although consumer bankruptcy auctions occur, the reality is that most people filing Chapter 7 have few assets that could be sold, and those few, such as a house or car, are often exempted from the bankruptcy estate and thus not eligible to be sold.
HARTFORD, CT, April 15, 2013
Auctions are sometimes part of business bankruptcy filings, although they also occur in Chapter 7 bankruptcy. When assets need to be liquidated to pay creditors, those assets are usually sold at auction to the highest bidder. A quick scan through Connecticut news reports shows that all kinds of assets are sold at these auctions.Recent Connecticut bankruptcy sales include:
- Baker's Shoes, a national chain with stores in Connecticut, auctioned off both its store leases and its shoe and boot inventory. It is also selling its intellectual property assets that include a customer database of 1.5 million names. The footwear retailer filed for bankruptcy in 2012, but was unable to reorganize.
- The iconic brands Wonder Bread, Twinkies, Ding Dongs and other bakery products were recently sold as part of a Hostess Brands Inc. bankruptcy. Hostess employed around 200 workers in Connecticut in retail and distribution jobs.
- Connecticut real estate mogul Ruth Jones lost her home and several investment properties in a bankruptcy auction after she filed Chapter 11.
- Friendly's Restaurants, with many outlets in Connecticut and throughout New England, sold off many stores after filing Chapter 11.
- The Journal Register Co. (JRC), which owns Connecticut newspapers such as the New Haven Register, the Register Citizen of Torrington and the Middletown Press, was purchased by 21st CMH Acquisition Co. at an auction approved by a bankruptcy judge in the Southern District of New York. All 285 Connecticut employees received notification of the sale as required by law. The sale of the company was part of its Chapter 11 bankruptcy filing.
- Although not a Connecticut auction, the sale of former Red Sox pitcher Curt Schilling's bloody sock from the 2004 World Series generated interest everywhere the Boston baseball team is revered. The sock sold for more than $92,000. Schilling filed bankruptcy after his video game company, 38 Studios of Rhode Island, went bankrupt.
As shown by these recent bankruptcy sales, businesses seeking to either reorganize or shut down can raise cash through auctions, either to keep a business running or to close it in an orderly way and pay creditors with the proceeds.
Foreclosure sales
Although foreclosure isn't necessarily part of bankruptcy, it often is. A foreclosure sale has a similar function to a bankruptcy auction - to raise the cash needed to pay creditors, in this case the bank or other mortgage holder. Foreclosure sales call up images of an auctioneer on the courthouse steps with the poor family standing by as their house is sold because they could not make the payments. The modern reality is quite different. Many foreclosure auctions take place online over several days or even weeks.
Although consumer bankruptcy auctions occur, the reality is that most people filing Chapter 7 have few assets that could be sold, and those few, such as a house or car, are often exempted from the bankruptcy estate and thus not eligible to be sold.
If you have questions about bankruptcy or foreclosure, an experienced bankruptcy and foreclosure lawyer such as those at Patriot Law Group-Connecticut can advise you.
Patriot Law Group
1331 Silas Deane Highway
Suite 204-J
Wethersfield, CT 06109
Website: www.patriotlawgroupct.com