February 11, 2016
Recently there was a case wherein Chapter 7 debtors owned a funeral home.
The real and personal property were to be sold at a Bankruptcy Auction.
The time within which the Trustee had authority to operate the funeral home was about to expire. At the auction, Bidder #1 was the highest bidder and was approved to purchase the real and personal property of the Debtor. Additionally Bidder #1 allowed the Debtors to live on the premises after the sale.
Bidder #1 obtained financing and took substantial steps to close the deal.
After the auction but before there was Court approval to sell the assets to Bidder #1, the Debtors brought forth Bidder #2. The Debtors wished to set aside the sale and approve the offer by Bidder #2 because it exceeded Bidder #1’s offer by $64,000.00.
However, the Court ruled that based on the circumstances it would not be fair to set aside the valid auction and there must be finality and certainty in the Bankruptcy auction and bidding process.
Bidder #1 went through considerable time, expense, resources and financing in order to consummate the sale. Furthermore, Bidder #1 may have an action against the estate for damages if Bidder #2 was allowed the purchase the assets.
Moral of story, a late bid is no bid at all.