A bulk sale is a sale of goods by a business which engages in selling items out of inventory, often in liquidating or selling a business, and is governed by Article 6 of the Uniform Commercial Code (UCC) which deals with bulk sales. Article 6 has been adopted at least in part in all states. If the parties do not comply with the notification process for a bulk sale, creditors of the seller may obtain a declaration that the sale was invalid against the creditors and the creditors may take possession of the goods or obtain judgment for any proceeds the buyer received from a subsequent sale.
UCC Section 6-104 specifies the duties of the bulk sales buyer, including determining the identity of the seller, and preparation of a list of claimants and a schedule of distribution. These duties are imposed on the buyer in order to give claimants the opportunity to learn of the bulk sale before the seller has been paid and disappeared with the money.
Connecticut Provision in Bulk Sales Agreement Regarding Information to be Supplied by Seller In a Connecticut Provision of a Bulk Sales Agreement, certain information must be provided by the seller to protect the buyer's interests and provide transparency in the transaction. This provision ensures that the buyer receives all relevant information regarding the assets being sold, potential liabilities, and other crucial details necessary for an informed decision. The following are the key aspects covered under the Connecticut Provision in a Bulk Sales Agreement: 1. Asset Description: The seller is obligated to provide a comprehensive description of the assets being sold, including detailed information on their quantity, quality, condition, and any associated intellectual property rights or licenses. 2. Financial Statements: The seller must supply valid financial statements, such as balance sheets, income statements, and cash flow statements, to reveal the financial health of the business being sold. These statements aid the buyer in assessing the profitability and viability of the transaction. 3. Tax Information: Complete tax information, including federal, state, and local taxes, is required. This includes providing tax returns for the previous few years, information on outstanding tax liabilities, and any pending audits or disputes. 4. Pending or Threatened Legal Actions: Sellers must disclose any ongoing or pending lawsuits, regulatory investigations, or other legal actions that may have a significant impact on the assets being sold. This gives the buyer an opportunity to evaluate potential risks and potential liabilities associated with the transaction. 5. Liabilities: All existing, contingent, or potential liabilities (such as debts, obligations, warranties, and guarantees) related to the assets being sold must be disclosed. Sellers are responsible for providing accurate information to ensure the buyer is fully aware of any financial burdens they may inherit. 6. Contracts and Agreements: The seller must provide copies of all relevant contracts, licenses, permits, leases, and agreements associated with the assets being sold. This includes supplier contracts, customer agreements, distribution agreements, and any other legally binding documents. 7. Intellectual Property Rights: Sellers have an obligation to disclose any intellectual property owned or used by the business being sold. This includes patents, trademarks, copyrights, trade secrets, and licenses. The buyer needs to understand the scope and validity of these intellectual property rights. 8. Employee Information: Sellers must furnish details concerning the workforce of the business being sold, including names, positions, compensation, benefits, and employment contracts. This information assists the buyer in assessing any potential labor-related issues and planning for the future. It is important to note that while the critical aspects mentioned above form the core provisions of the Connecticut Provision in a Bulk Sales Agreement regarding information to be supplied by the seller, additional requirements may exist depending on the specific nature of the assets involved or the industry in question. In summary, the Connecticut Provision in a Bulk Sales Agreement ensures that the buyer receives comprehensive information about the assets being sold, financial position, potential liabilities, ongoing legal actions, contracts, intellectual property rights, and employee details. This provision is crucial for both parties to make an informed decision and mitigate potential risks associated with the transaction.
