Bulk / Business Sale Escrow

What Is A Business Sale Escrow / Bulk Sale Escrow?

Types of Escrows:

• Business
• Gas Station
• Restaurant
• Dry Cleaner
• Auto Repair & More

Alcoholic Beverage Control License:

• Selling / Transfer of ABC License

A bulk sale escrow is a type of escrow agreement used when a business sells its assets (like inventory, equipment, or the business itself) in a non-routine transaction, often when the business is facing financial difficulties. It’s designed to protect unsecured creditors by ensuring that the sale proceeds are used to pay debts and taxes, rather than potentially being misused by the seller.

Key aspects of a bulk sale escrow:

Protects Creditors:
The escrow agreement prevents the seller from misappropriating the sale proceeds and ensures they are used to settle outstanding debts and taxes owed to creditors.

Specialized Escrow Process:
Handling a bulk sale escrow is more complex than a typical real estate escrow, often requiring an experienced escrow officer familiar with the specific laws and regulations governing bulk sales.

Legal Compliance:
Bulk sales often require adherence to specific state laws, including the need to notify creditors and file notices with relevant agencies.

Escrow Agent’s Role:
An escrow agent collects the sale proceeds from the seller, holds them in escrow, and disburses them according to the terms of the agreement and applicable laws.

Potential Liability:
Buyers in bulk sales may be held liable for the seller’s debts in certain circumstances, depending on state law.

In essence, a bulk sale escrow is a legal and financial safeguard to ensure a fair and orderly sale of business assets, particularly when a business is facing financial challenges, and creditors’ interests are at stake.

For more information, contact Kimberly at (909) 591-9387