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Recently, a Miami bankruptcy trustee did not use classic liquidators when needing to sell a debtor’s vehicle. Instead, he used eBay. This is not an isolated approach, as many trustees in Miami and around the U.S., are increasingly using web-based sellers to improve the prices on bankruptcy liquidations.

Using online auction and “for sale” sites is increasing the dollars available for creditors. One bankruptcy liquidator called the Internet “the single most revolutionary tool the auction business has ever seen.” Everything from million dollar homes to cemetery plots have been successfully sold via the web.

The nation’s liquidators have good reason to seek out the best asset-conversion-to-cash options. Around $2 billion in assets for Chapter 7 bankruptcy cases and $10 billion worth of assets involved in Chapter 11 Reorganization filings must be liquidated. A significant amount of these liquidations now take place over the Internet.

These opportunities have not been lost on others. Other liquidation competitors, aware that eBay enjoys more than $13 billion in sales annually, are appearing in the market. A number of bankruptcy liquidators have designed websites that offer bankruptcy assets.

With modest beginnings in 2005, online sales of bankruptcy assets, deliver up to 20 percent of liquidation dollars for some auction company websites. Other sites allow users to access court bankruptcy filings, in addition to buying and selling bankruptcy assets. Some companies offer “live auction webcasting” services to use the power of the ‘Net in liquidating bankruptcy assets. This feature is proving to be a big attraction for many prospective buyers.

Along with progressive dealers, many users of these sites are end-buyers, further increasing the sales price of many items, particularly vehicles. The recent global recession and financial crisis has increased bankruptcy petitions. Using Internet marketplaces offers increasing trustee returns for creditors.

Do you believe this trend of using the web to sell bankruptcy assets will continue? Should people or companies considering bankruptcy use the same approach to generate much needed cash?

Source: San Francisco Gate, “Bankruptcy liquidators turn to Web,” Dawn McCarty and Phil Milford, Sept. 28, 2012

  • Our firm handles similar situations to the one discussed in this post. If you would like to learn more about our practice, please visit our Miami Chapter 7 bankruptcy page.