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    Buyback Offer

    Before I ask the question here is some background,

    Filed ch7 on Oct 31
    personal debt and debt from sole propriotership small business
    Have remaining inventory with cost value of about $30,000
    Estimated wholesale liquidation value $15,000 (value documented on filing paperwork as per lawyer)
    Had 341 meeting on Dec 9, Trustee presented an offer for me to "buy back" my inventory. I did not expect this therefore I could not make a decision on the spot.

    Thinking it through I may make an offer, however I have no idea where to start with an offer.
    Has anyone had any experience as to what a fair offer may be, and what to expext from the trustee?

    #2
    Not knowing the type of inventory, it is hard to tell the marketability of your stock. I would offer no more than 40% adjusted value or let him sell it (if he can). Get a bargain if you can. He may just abandon the stuff if he does not feel like an easy sell. 'Hub
    If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

    Comment


      #3
      I'm with 'Hub on this. You need to offer around 50%, but probably start lower. You need to know what your "bottom" number is! Remember, it's a negotiation and the Trustee may come back quickly and say no at a 40% offer. As 'Hub states, and suggests, you need to know and understand the value of the inventory and how quickly one could liquidate the inventory. This is exactly what the Trustee is "thinking" at this time. The Trustee also has to factor the cost to have it auctioned (or liquidated). That further depresses the value.

      The thing now is that you have already estimated the liquidation price at $15K. Was that a "fire sale" or a normal liquidation? Since you're at $15K already, you still need to make money on it. I don't know your inventory or it's value, bit to make money on it, it may only really be worth $10K in a fire sale. If you could get it for $10K from the Trustee and sell it for $15K-$20K in gross sales... is that worth it?
      Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
      Status: (Auto) Discharged and Closed! 5/10
      Visit My BKForum Blog: justbroke's Blog

      Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

      Comment


        #4
        The inventory consists of mainly toys, action figures, dolls, etc. Some of the items i've beem sitting on for over 18 months, and cant sell for even 20% of the true cost.

        The value of $15,000 is a number we just threw out there as an estimate, I have no idea what a true liquidition value would be.

        If 40-50% is the norm. than I may be better to wait it through and see what happens. I dont have that kind of money, nor can I ask any one to borrow that much.

        Comment


          #5
          In some cases, it's best to let the Trustee take it and liquidate it. If it's really difficult to gauge, I'd stay away from it! Especially since you may still be sitting on it for another 18 months, having spent $10K in "liquid" cash to purchase the inventory.
          Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
          Status: (Auto) Discharged and Closed! 5/10
          Visit My BKForum Blog: justbroke's Blog

          Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

          Comment


            #6
            Originally posted by justbroke View Post
            In some cases, it's best to let the Trustee take it and liquidate it. If it's really difficult to gauge, I'd stay away from it! Especially since you may still be sitting on it for another 18 months, having spent $10K in "liquid" cash to purchase the inventory.
            Thank you JB for your complimentary agreement with me, but now I lower my offer on this stock. First, toys age out as new "toys" come into realm. If our OP friend sat on this for a season, and now the season is over, I fear he will be stuck with this crap and cannot even donate it for tax relief. My suggestion is give it to the Trustee. Either the Trustee will sell it (whether the charges for the auction is good or not, it is not the OPs problem) and be done with it, or the Trustee will give up and just abandon it. The the OP will not lose anything at all but may actually gain if the Trustee gives it up. Then at least, he can give the stuff away next Christmas for a tax deduction or sell it at cost. 'Hub
            If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

            Comment


              #7
              I say let the Trustee try to liquidate the old stock. Chances are the Trustee will try to sell as a single lot, which for any potential buyer is a big financial risk - meaning the chances of getting a buyer is pretty slim. If you attend the auction in person, you might then be able to buy it at a very low cost that may be worthwhile.

              Comment


                #8
                Very good advice from btheme right there! Attend the auction yourself. In fact, many Trustees in Florida don't negotiate with debtors. Instead, they tell the debtor to go bid at the auction!
                Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                Status: (Auto) Discharged and Closed! 5/10
                Visit My BKForum Blog: justbroke's Blog

                Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

                Comment


                  #9
                  I would also add that you are under no obligation to do the Trustee's homework, either.

                  No reason to do a detailed inventory or per-item value - just a general description such as "12 larges boxes of assorted contemporary plastic action figures and toys" would probably suffice. When faced with the daunting task of inventorying them and getting a value, Trustees will generally take the easy route of just spitballing a lot value and seeing what they can get at auction. If the answer is "zero", then they may abandon. If the answer is significantly lower that they expect, you might get a terrific deal. But, abandonment should be your goal, so don't do more than the absolute minimum in helping the Trustee with this.

                  Comment


                    #10
                    Originally posted by AngelinaCatHub View Post
                    Thank you JB for your complimentary agreement with me, but now I lower my offer on this stock. First, toys age out as new "toys" come into realm. If our OP friend sat on this for a season, and now the season is over, I fear he will be stuck with this crap and cannot even donate it for tax relief. My suggestion is give it to the Trustee. Either the Trustee will sell it (whether the charges for the auction is good or not, it is not the OPs problem) and be done with it, or the Trustee will give up and just abandon it. The the OP will not lose anything at all but may actually gain if the Trustee gives it up. Then at least, he can give the stuff away next Christmas for a tax deduction or sell it at cost. 'Hub
                    After thinking it over I agree.
                    In my "day job" the goal is to have no inventory over 6 months, with each passing month the probability of a sale decreases, eventually becoming idle inventory. This cant be more true than with toys. The "Hot" toy now in 6 months no one wants to know about. I learned the hard way, the inventory investment is part of the reason for filing bk.
                    I will keep quiet and see what happens, almost at the 30 day point. I figure dont wake the sleeping giant, I'm hoping on the fact that I have no assets, except the inventory, I own no property, lease vehicle etc. the case may have little interest. Additionally, the inventory has a $4000 exemption, so if the trustee does take the inventory and is able to sell I get the first $4000, I'm sure this is somthing being considered.

                    Comment


                      #11
                      If you are entitled to the first $4k I would definitely let the trustee have it. My guess is you'll probably get it back for nothing.

                      Comment


                        #12
                        I'd rather just wait, if he does all the work and you get 4k, you win, but my guess is that knowing the exemption amount it will get abandoned, yu win either way. The opening bid would have to cover the eexmpt value from what I understand., which isn't likely to happen. Just wait.

                        Comment

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