Typical cost of selling via consignment?

T18skyguy wrote:

mich800 wrote:

T18skyguy wrote:
The language used was "all property on the defunct business is assigned to the lienholders"

That sounds like part of a financing statement or collateral agreement. There is way too much missing in that statement to mean anything. The biggest being what consideration was given to transfer ownership. They may have actually sold the unit to the dealership and they agreed to payment after they get paid but that is not consignment that is a sale. In that case they are an unsecured creditor.

There we're 30 of them, and they we're on consignment for sale. I actually knew one of the individuals. I know that the dealership was hundreds of thousands in debt. Perhaps they declared bankruptcy. They closed and chained the gates and not a single owner was allowed on the property. They lost their rigs. I'm not a lawyer, so you guys tell me how that could happen. One other thing I remember, is the rig owners had a legal right to get paid, but it all went to satisfy the senior lien holders, and there was nothing left in the kitty after the seniors got paid.

That is the classic scenario when the lender demands on the note and takes control. If these people were duped or unknowingly transferred ownership, yes they were SOL and had to stand in line. But I would be shocked to see any law requiring this transfer for a consignment or broker arrangement. Secured lenders deal with consigned inventory all the time. In fact every deal I audit consigned inventory is excluded from the borrowing base eligibility. There is far more to this story. It would actually be an interesting one to look at and see what happened.