A liquidation auction sells goods of a liquidated company to raise funds for creditors. It can be an opportunity to get good deals, but buyers should be careful as returns are not accepted, and prices may be artificially high due to public interest. Advance notice is sometimes provided.
A liquidation auction is technically an auction in which the goods of a liquidated company are sold with the aim of raising sufficient funds to satisfy creditors. People may also use the term “sales auction” to refer to a surplus auction or other types of auctions, such as government car auctions. The term is used in this sense to imply that everything must go, with the aim of releasing all stock, regardless of whether or not the deal is closed.
In the case of a closing deal, the liquidation auction is one of the stages of closing. Companies can voluntarily liquidate or be forced to do so, with the auction being managed by an auction house. As a general rule, auction funds go to creditors first and are then divided among shareholders. Clearance includes inventory, such as merchandise that the business was selling, as well as items such as furniture and office supplies; essentially, anything the company owns that is of value will be sold in a liquidation auction. Sometimes high value items like corporate art are auctioned separately.
Participating in a closeout auction can be an excellent way to get good deals on goods, products, furniture and so on. However, people should be careful. The auction may not allow for inspection in advance, making it difficult to know if something is a good buy or not, and returns are not accepted; therefore, entrants should make sure they are positive about a purchase before placing a bid.
It is also sometimes possible that prices are artificially high because there is widespread public interest in the company and the auction; when a prominent company goes bankrupt and a liquidation auction is held, people may shop at the auction to buy souvenirs, and therefore may attach greater value to the auction goods.
Usually, a closeout auction is announced in a registered newspaper to notify people. You can also join mailing lists that advertise auctions or subscribe to a specific auction house to be notified when auctions are held. Sometimes advance notice is also provided with an invitation to a preview event where people will be allowed to inspect the items included in the option. This can give people an opportunity to get an idea of what’s up for auction and identify pieces of particular interest.
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