Emory Bankruptcy Developments Journal


Anthony Check


Bulk sale statutes require purchasers in a bulk sale to follow certain procedures in order to protect the state’s interest in recovering and collecting unpaid taxes. The recent decision in Illinois Department of Revenue v. Hanmi Bank left many practitioners wanting for a more robust answer to the questions of whether bulk sale provisions create interests of value for state revenue departments and how courts should classify those interests. The author argues that these interests should be protectable under § 363(e) of the Bankruptcy Code. The author further provides a framework for courts to determine the extent to which this protection should extend. Under this framework, which builds on statements made in dicta in Illinois Department of Revenue v. Hanmi Bank, the burden should be placed on a state’s department of revenue to prove that failing to protect an interest derived from the bulk sale statute will result in that interest losing value. A state would successfully prove this by showing that it would have recovered value from its interest had that interest been protected.