bulk sales – generally refers to the sale, transfer, mortgage or assignment of: (1) a stock of goods, wares, merchandise, provisions or materials not in the ordinary course of business; (2) all or substantially all of the business or trade; or (3) all or substantially all of the fixtures and equipment used in the business. (see Bulk Sales Law, sec. 2)
Sec. 4. Fraudulent and void sale, transfer or mortgage. — Whenever any person shall sell, mortgage, transfer, or assign any stock of goods, wares, merchandise, provisions or materials, in bulk, for cash or on credit, and shall receive any part of the purchase price, or any promissory note, or other evidence of indebtedness for said purchase price or advance upon mortgage, without having first delivered to the vendee or mortgagee or to his or its agent or representative, the sworn statement provided for in section three hereof, and without applying the purchase or mortgage money of the said property to the pro rata payment of the bona fide claim or claims of the creditors of the vendor or mortgagor, as shown upon such sworn statement, he shall be deemed to have violated this Act, and any such sale, transfer or mortgage shall be fraudulent and void. (Bulk Sales Law)
The Bulk Sales Law is designed to prevent the defrauding of creditors by the secret sale or disposal or mortgage in bulk of all or substantially all of a merchant’s stocks or goods. (see Comments and Cases on Sales and Lease, p. 495 ).
If Holding Company X sells all or substantially all of its assets (consisting of shares of stocks), is that a sale covered by the Bulk Sales Law?