8.6A-107 - A-107. Liability for noncompliance.
§ 8.6A-107. Liability for noncompliance.
(1) Except as provided in subsection (3), and subject to the limitation insubsection (4):
(a) A buyer who fails to comply with the requirements of § 8.6A-104(1) (e)with respect to a creditor is liable to the creditor for damages in theamount of the claim, reduced by any amount that the creditor would not haverealized if the buyer had complied; and
(b) A buyer who fails to comply with the requirements of any other subsectionof § 8.6A-104 with respect to a claimant is liable to the claimant fordamages in the amount of the claim, reduced by any amount that the claimantwould not have realized if the buyer had complied.
(2) In an action under subsection (1), the creditor has the burden ofestablishing the validity and amount of the claim, and the buyer has theburden of establishing the amount that the creditor would not have realizedif the buyer had complied.
(3) A buyer who:
(a) Made a good faith and commercially reasonable effort to comply with therequirements of § 8.6A-104(1) or to exclude the sale from the application ofthis title under § 8.6A-103(3); or
(b) On or after the date of the bulk sale agreement, but before the date ofthe bulk sale, held a good faith and commercially reasonable belief that thistitle does not apply to the particular sale is not liable to creditors forfailure to comply with the requirements of § 8.6A-104. The buyer has theburden of establishing the good faith and commercial reasonableness of theeffort or belief.
(4) In a single bulk sale the cumulative liability of the buyer for failureto comply with the requirements of § 8.6A-104(1) may not exceed an amountequal to:
(a) If the assets consist only of inventory and equipment, twice the netcontract price, less the amount of any part of the net contract price paid toor applied for the benefit of the seller or a creditor; or
(b) If the assets include property other than inventory and equipment, twicethe net value of the inventory and equipment less the amount of the portionof any part of the net contract price paid to or applied for the benefit ofthe seller or a creditor which is allocable to the inventory and equipment.
(5) For the purposes of subsection (4) (b), the "net value" of an asset isthe value of the asset less (i) the amount of any proceeds of the sale of anasset, to the extent the proceeds are applied in partial or totalsatisfaction of a debt secured by the asset and (ii) the amount of any debtto the extent it is secured by a security interest or lien that isenforceable against the asset before and after it has been sold to a buyer.If a debt is secured by an asset and other property of the seller, the amountof the debt secured by a security interest or lien that is enforceableagainst the asset is determined by multiplying the debt by a fraction, thenumerator of which is the value of the asset on the date of the bulk sale andthe denominator of which is the value of all property securing the debt onthe date of the bulk sale. The portion of a part of the net contract pricepaid to or applied for the benefit of the seller or a creditor that is"allocable to the inventory and equipment" is the portion that bears thesame ratio to that part of the net contract price as the net value of theinventory and equipment bears to the net value of all of the assets.
(6) A payment made by the buyer to a person to whom the buyer is, or believeshe is, liable under subsection (1) reduces pro tanto the buyer's cumulativeliability under subsection (4).
(7) No action may be brought under subsection (1) (b) by or on behalf of aclaimant whose claim is unliquidated or contingent.
(8) A buyer's failure to comply with the requirements of § 8.6A-104(1) doesnot (i) impair the buyer's rights in or title to the assets, (ii) render thesale ineffective, void, or voidable, (iii) entitle a creditor to more than asingle satisfaction of his claim, or (iv) create liability other than asprovided in this title.
(9) Payment of the buyer's liability under subsection (1) discharges protanto the seller's debt to the creditor.
(10) Unless otherwise agreed, a buyer has an immediate right of reimbursementfrom the seller for any amount paid to a creditor in partial or totalsatisfaction of the buyer's liability under subsection (1).
(11) If the seller is an organization, a person who is in direct or indirectcontrol of the seller, and who knowingly, intentionally, and without legaljustification fails, or causes the seller to fail, to distribute the netcontract price in accordance with the schedule of distribution is liable toany creditor to whom the seller undertook to make payment under the schedulefor damages caused by the failure.
(1997, c. 121.)