Simple Definition – An asset liquidation whereby a court appointed Bankruptcy Trustee sells the assets of the debtor / bankruptcy estate.
Legal Definition – Upon filing a bankruptcy petition, the court appoints a Trustee to review the debtor’s schedule of assets and represent the interest of the creditors in the bankruptcy case. Also upon filing, an automatic “stay” is issued which prohibits collection actions against the debtor or the estate. Upon “lifting the stay”, or “relief from stay”, it is the Trustee’s responsibility to liquidate the assets and distribute the proceeds to the creditors based upon each creditors priority position.
Ownership – The debtor selects certain assets to be exempted from use to pay the claims of creditors based upon a statutory list of exemptions available under state law. The property that is not exempt belongs to the estate and is sold by the Trustee to pay for the administrative costs (including auction costs) and to pay creditors’ claims.
Unique Process Involved – Must follow Federal and State bankruptcy laws.
Important to Keep in Mind – Generally, Atlantic Auctions is selling non-real estate assets under a bankruptcy sale.