Card Set Information
What is in Article 6 World – bulk transfers.
(1) Transfer of all/substantially all of a transferor’s assets
(2) Not in the ordinary course of business
(3) Which occurs in MD.
What is exempted from Article 6 World
(1) Granting or repossession of a security interest
(2) Assignment of benefits for all creditors
(3) Forced sales in court or bankruptcy
(4) Sales in bankruptcy reorganization
(5) To a person obligated to pay full debt, remains solvent, operates business in MD and gives public notice.
(6) To an entity that assumes debt and provides public notice.
(1) Advertisement in a newspaper at least once per week for two weeks
(2) Names and address of transferor and transferee
(3) Effective date of transfer
What happens if the bulk transfer is subject to Article 6 but does not meet its obligations?
The bulk transfer is ineffective, and creditor is entitled to take property despite the transfer.
General Requirements for Bulk Transfers
(1) List of creditors
(2) List of property
(3) Keep list for 6 months
(4) Notice before transfer or sale
(5) New consideration goes to transferor’s debts.
Burden is on Transferee.
Notice to Creditors
Proper notice to creditors requires
(1) Notice to all creditors and MD State Comptroller
(2) 10 days before transfer/sale
Notice through personal service or certified mail.
Form of notice requires
(1) Bulk transfer is to be made
(2) Names of the transferor/ee
(3) Whether debts will be paid in full
(4) Address to submit bills
If debts not paid in full, notice also requires
(1) Location and description of property
(2) Address where property can be inspected
(3) Amount of debts that are being paid
(4) Whether transfer for new consideration
(5) Where to submit claims
Access to lists.
Transferee must make list of property and creditors available at all reasonable hours.
Transferee may file lists at circuit court.
Payment to the creditors
For any new consideration, the transferee must ensure that the payment is applied to the debts of creditors.
Any creditor can dispute this for benefit of all creditors.
If consideration is less than debts, pro-rata distribution.
Timeframe to Assert Creditor Rights
A creditor must assert rights within 6 months.
If transfer concealed, a creditor must assert rights within 6 months of discovery.
When the initial transferee transfers property to another. Need not be bulk.
(1) If no consideration, creditors have priority.
(2) If consideration given, subsequent transferee takes free and clear.
Auctioneer is like a transferee.
If auctioneer knows of bulk transfer, he is liable for the full amount of the auction.
Auctioneers are jointly and severably liable.