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Definition Of Bulk Sales Escrow:


A type of escrow agreement placed on the sale ofinventory, business assets or an entire company.
The escrow serves to protect the interests of unsecured creditors: iteliminates the risk that the seller of the assets will use the proceeds from the sale for purposes other than paying debts or taxes owed.Acompany experiencing financial difficulty can easeits problems by downsizing its business and selling off portions ofits 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.

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