8.6A-102 - A-102. Definitions and index of definitions.

§ 8.6A-102. Definitions and index of definitions.

(1) In this title, unless the context otherwise requires:

(a) "Assets" means the inventory that is the subject of a bulk sale and anytangible and intangible personal property used or held for use primarily inor arising from the seller's business and sold in connection with thatinventory, but the term does not include:

(i) Fixtures as described in subdivision (a) (41) of § 8.9A-102, other thanreadily removable factory and office machines;

(ii) The lessee's interest in a lease of real property; or

(iii) Property to the extent it is generally exempt from creditor processunder nonbankruptcy law.

(b) "Auctioneer" means a person whom the seller engages to direct, conduct,control, or be responsible for a sale by auction.

(c) "Bulk sale" means:

(i) In the case of a sale by auction or a sale or series of sales conductedby a liquidator on the seller's behalf, a sale or series of sales not in theordinary course of the seller's business of more than half of the seller'sinventory as measured by value on the date of the bulk sale agreement, if onthat date the auctioneer or liquidator has notice, or after reasonableinquiry would have had notice, that the seller will not continue to operatethe same or a similar kind of business after the sale or series of sales; and

(ii) In all other cases, a sale not in the ordinary course of the seller'sbusiness of more than half the seller's inventory, as measured by value onthe date of the bulk-sale agreement, if on that date the buyer has notice, orafter reasonable inquiry would have had notice, that the seller will notcontinue to operate the same or a similar kind of business after the sale.

(d) "Claim" means a right to payment from the seller, whether or not theright is reduced to judgment, liquidated, fixed, matured, disputed, secured,legal, or equitable. The term includes costs of collection and attorney'sfees only to the extent that the laws of this state permit the holder of theclaim to recover them in an action against the obligor.

(e) "Claimant" means a person holding a claim incurred in the seller'sbusiness other than:

(i) An unsecured and unmatured claim for employment compensation andbenefits, including commissions and vacation, severance, and sick leave pay;

(ii) A claim for injury to an individual or to property, or for breach ofwarranty, unless:

(A) A right of action for the claim has accrued;

(B) The claim has been asserted against the seller; and

(C) The seller knows the identity of the person asserting the claim and thebasis upon which the person has asserted it; and

(iii) A claim for taxes owing to a governmental unit.

(f) "Creditor" means a claimant or other person holding a claim.

(g) "Date of the bulk sale" means:

(A) If the sale is by auction or is conducted by a liquidator on the seller'sbehalf, the date on which more than 10 percent of the net proceeds is paid toor for the benefit of the seller; and

(B) In all other cases, the later of the date on which:

(i) More than 10 percent of the net contract price is paid to or for thebenefit of the seller; or

(ii) More than 10 percent of the assets, as measured by value, aretransferred to the buyer.

(iii) For purposes of this subsection:

(A) Delivery of a negotiable instrument (§ 8.3A-104 (a)) to or for thebenefit of the seller in exchange for assets constitutes payment of thecontract price pro tanto;

(B) To the extent that the contract price is deposited in an escrow account,the contract price is paid to or for the benefit of the seller when theseller acquires the unconditional right to receive the deposit or when thedeposit is delivered to the seller or for the benefit of the seller,whichever is earlier; and

(C) An asset is transferred when a person holding an unsecured claim can nolonger obtain through judicial proceedings rights to the asset that aresuperior to those of the buyer arising as a result of the bulk sale. A personholding an unsecured claim can obtain those superior rights to a tangibleasset at least until the buyer has an unconditional right, under the bulksale agreement, to possess the asset, and a person holding an unsecured claimcan obtain those superior rights to an intangible asset at least until thebuyer has an unconditional right, under the bulk sale agreement, to use theasset.

(h) "Date of the bulk sale agreement" means:

(i) In the case of a sale by auction or conducted by a liquidator (subsection(c) (i)), the date on which the seller engages the auctioneer or liquidator;and

(ii) In all other cases, the date on which a bulk sale agreement becomesenforceable between the buyer and the seller.

(i) "Debt" means liability on a claim.

(j) "Liquidator" means a person who is regularly engaged in the business ofdisposing of assets for businesses contemplating liquidation or dissolution.

(k) "Net contract price" means the new consideration the buyer is obligatedto pay for the assets less:

(i) The amount of any proceeds of the sale of an asset to the extent that theproceeds are applied in partial or total satisfaction of a debt secured bythe asset; and

(ii) The amount of any debt to the extent it is secured by a securityinterest or lien that is enforceable against the asset before and after ithas been sold to a buyer. If a debt is secured by an asset and other propertyof the seller, the amount of the debt secured by a security interest or lienthat is enforceable against the asset is determined by multiplying the debtby a fraction, the numerator of which is the value of the new considerationfor the asset on the date of the bulk sale and the denominator of which isthe value of all property securing the debt on the date of the bulk sale.

(l) "Net proceeds" means the new consideration received for assets sold ata sale by auction or a sale conducted by a liquidator on the seller's behalfless:

(i) Commissions and reasonable expenses of the sale;

(ii) The amount of any proceeds of the sale of an asset, to the extent thatthe proceeds are applied in partial or total satisfaction of a debt securedby the asset; and

(iii) The amount of any debt to the extent it is secured by a securityinterest or lien that is enforceable against the asset before and after ithas been sold to a buyer. If a debt is secured by an asset and other propertyof the seller, the amount of the debt secured by a security interest or lienthat is enforceable against the asset is determined by multiplying the debtby a fraction, the numerator of which is the value of the new considerationfor the asset on the date of the bulk sale and the denominator of which isthe value of all property securing the debt on the date of the bulk sale.

(m) A sale is "in the ordinary course of the seller's business" if the salecomports with usual or customary practices in the kind of business in whichthe seller is engaged or with the seller's own usual or customary practices.

(n) "United States" includes its territories and possessions and theCommonwealth of Puerto Rico.

(o) "Value" means fair market value.

(p) "Verified" means signed and sworn to or affirmed.

(2) The following definitions in other titles apply to this title:

(a) "Buyer" - § 8.2-103 (1) (a);

(b) "Equipment" - § 8.9A-102 (a) (33);

(c) "Inventory" - § 8.9A-102 (a) (48);

(d) "Sale" - § 8.2-106 (1);

(e) "Seller" - § 8.2-103 (1) (d).

(3) In addition, Title 8.1A contains general definitions and principles ofconstruction and interpretation applicable throughout this title.

(1997, c. 121; 2000, c. 1007; 2003, c. 353.)