Consignment - how safe in a bankruptcy
Posted by Deb on January 18, 2002 at 17:49:54:
After discussing this with a fellow crafter, we are at a stalemate. It was always my understanding that a consignor took priority over a secured creditor. As a back up - just in case - I always include a guaranteed payment clause in my contract to cover loss, damage or theft, and also require a signed and dated receipt of new stock. My records are always current and in order.
My fellow crafter friend is adamant that consigned stock is treated the same as unsecured creditors' stock, and gone forever if a shop or gallery files bankruptcy. She lists as her sources as advice from two attorneys, and a passage in one of Barbara Brabec's books.
Early on I read a few of Barbara's books, and she does make some good points, but I don't recall ever reading anything like this. I've also read (struggled) through the UCC, with special attention to the section pertaining to consignments. Unless I've missed something, I believe I am correct.
This is really gnawing at me. I've been biting my tongue as this woman tells crafters in this recently bankrupted shop to just write off their losses.
Would you please clarify?