Posted By:
boxingcardmanand getting to the only legit questions posed by the Bruces:
An auctioneer does not have title to the items consigned to it but acts as agent for the titleholder in transferring title. Consequently, the assets in question are not assets of the auctioneer and should not be considered either an asset of a bankrupt's estate or an asset of the auctioneer for any other purpose.
1. If an auctioneer goes bankrupt, the court would establish a claims framework to allow the owners of the consigned materials to come forward and claim their stuff; my guess is a receiver and a claims application procedure. The court would preside over the process. It would take a while but if the items are there, valid and timely claims should be honored.
2. If an auctioneer goes BK after the auction, I am not sure of the disposition of the cash but I suspect that a similar answer applies. However, if the auctioneer stole some of the proceeds, the consignors would likely get only a pro-rata share of the remaining cash pool.
In either scenario in bankruptcy there would in all likelihood be a heck of a slap fight between the consignors and the other creditors of the auctioneer over ownership and it would definitely take some time before anyone saw any of their stuff or money.
Edited to add: Bankruptcy is all about priorities among creditors feasting on the bankrupt's carcass; the creditors form a "food chain" where the higher the class of creditor the more likely it is to recover. An unsecured general creditor (like the catalog designer who hasn't been paid yet for the work done on the next auction catalog) is the lowest form of life on that food chain; it gets the crumbs after everyone else has eaten. My unresearched hunch is that a consignor whose item is held by the auctioneer would fall into the top tier of creditors, akin to a secured creditor, but I haven't researched it yet.
3. If an auctioneer is indicted, it doesn't necessarily shut down--it would have to be convicted or subject to some sort of provisional remedy. It even might make sense for the auctioneer to run pending auctions under a receiver. If the government did shut it down, my assumption is that a receiver would be appointed to run the auctioneer's affairs and see that any property that wasn't its property would be returned to the owners. Again, it would take time and some work to get your stuff back.
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