Bulk Sales Escrow


DEFINITION of 'Bulk Sales Escrow'

A type of escrow agreement placed on the sale of inventory, business assets or an entire company. The escrow serves to protect the interests of unsecured creditors: it eliminates the risk that the seller of the assets will use the proceeds from the sale for purposes other than paying debts or taxes owed.

BREAKING DOWN 'Bulk Sales Escrow'

A company experiencing financial difficulty can ease its problems by downsizing its business and selling off portions of its inventory or business assets. To ensure the proceeds from these liquidations aren't lost in further unprofitable business operations, an escrow agent receives the funds from the seller, holds them until the transfer of the assets and then forwards the funds to the appropriate parties. Escrow fees are charged for this service and are usually shared by the buyer and the seller, but the escrow agreement can specify any fee payment arrangement agreed to by the parties.

  1. Secured Debt

    Debt backed or secured by collateral to reduce the risk associated ...
  2. Inventory

    The raw materials, work-in-process goods and completely finished ...
  3. Unsecured Creditor

    An individual or institution that lends money without obtaining ...
  4. Escrow Agreement

    A legal documents that outlines the terms and conditions between ...
  5. Escrow

    A financial instrument held by a third party on behalf of the ...
  6. Closing Costs

    The expenses, over and above the price of the property that buyers ...
Related Articles
  1. Markets

    How To Calculate A Z-Score

    Investors need to know how to detect signs of looming bankruptcy. The Z-score can help.
  2. Fundamental Analysis

    Inventory Valuation For Investors: FIFO And LIFO

    We go over these methods of calculating this component of the balance sheet, and how the choice affects the bottom line.
  3. Bonds & Fixed Income

    An Overview Of Corporate Bankruptcy

    If a company files for bankruptcy, stockholders have the most to lose. Find out why.
  4. Term

    What's a Sector?

    The term sector has several applications in economics and finance.
  5. Economics

    What are Acquisition Costs?

    A company can recognize acquisition costs as those costs used to buy property and equipment.
  6. Investing Basics

    What Does In Specie Mean?

    In specie describes the distribution of an asset in its physical form instead of cash.
  7. Economics

    Understanding Production Efficiency

    Production efficiency is the point at which an economy cannot increase output of a good or service without lowering the production of another product.
  8. Economics

    Understanding Bad Debt

    Bad debt is money a company or lender is owed, but is unable to collect.
  9. Economics

    Explaining Synergy

    Synergy is the concept of combining two or more entities to create something greater than either entity on its own.
  10. Economics

    What Does Short Run Mean?

    Short run is the concept that for a business, at least one factor of production is fixed while others are variable.
  1. Does working capital include inventory?

    A company's working capital includes inventory, and increases in inventory make working capital increase. Working capital ... Read Full Answer >>
  2. How does a forward contract differ from a call option?

    Forward contracts and call options are different financial instruments that allow two parties to purchase or sell assets ... Read Full Answer >>
  3. Over what time period should I be looking at the forward rate?

    Your target time horizon for forward rates depend on your own investment horizon. If you have a specific forward contract, ... Read Full Answer >>
  4. What kinds of derivatives are types of forward commitments?

    A derivative is a type of security in which the price of the security is dependent on underlying assets. A derivative could ... Read Full Answer >>
  5. How do I calculate a forward rate in Excel?

    You need to have the zero-coupon yield curve information to calculate forward rates, even in Microsoft Excel. Once the spot ... Read Full Answer >>
  6. How can I calculate funds from operation in Excel?

    In general, the terms "work in progress" and "work in process" are used interchangeably to refer to products midway through ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Real Estate Investment Trust - REIT

    A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges ...
  2. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  3. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  4. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  5. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  6. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!