Legal Definitions - bulk transfer

A bulk transfer refers to the sale or transfer of a substantial portion of a business's inventory, materials, supplies, or other merchandise, when that transfer is not part of the business's ordinary operations. The purpose of laws governing bulk transfers is typically to protect the seller's creditors by requiring notice of such a sale, preventing a business from selling off its assets and then disappearing without paying its debts.

Here are some examples to illustrate this concept:

• Example 1: Retail Store Liquidation

  A small bookstore decides to close its physical location. Instead of selling books one by one to customers over several months, the owner sells the entire remaining stock of thousands of books, along with all the display shelves and cash registers, in a single transaction to a company that specializes in buying out closing businesses.

  This illustrates a bulk transfer because a significant portion of the bookstore's merchandise (its entire inventory) and equipment was transferred in one large sale, which is not the usual way a bookstore operates (selling individual books to consumers).

• Example 2: Manufacturer Selling Raw Materials

  A textile manufacturer, facing a change in product strategy, sells off 80% of its stored raw cotton and dye supplies to another textile company. This sale is not part of its regular process of using these materials to produce finished fabrics for its customers.

  This is a bulk transfer because a substantial amount of the manufacturer's materials and supplies was transferred outside its normal business activities of manufacturing and selling textiles.

• Example 3: Restaurant Equipment Sale

  A pizzeria owner sells all the kitchen equipment—including the pizza ovens, dough mixers, refrigerators, and prep tables—as well as all the dining room tables and chairs, to a new entrepreneur who plans to open a different type of restaurant in the same location.

  This demonstrates a bulk transfer because a significant portion of the restaurant's essential equipment and supplies, necessary for its operation, was transferred in a single transaction, rather than through the normal course of selling pizzas and meals to customers.