          
          
          
          
                         Stressing Distress Sales
          
               Government agencies and lenders often auction
          properties that have been owned by individuals or
          businesses in financial distress.  The property is sold
          to raise cash and satisfy creditors.  As you'd expect,
          sellers in such situations are usually in no position to
          bargain, so buyers can frequently find good deals.
               For example, there are over 1 million individuals
          and companies declaring bankruptcy in the United States
          each year.  When you're bankrupt, you owe more than you
          can pay.  Often, bankrupts have to sell their possessions
          to pay off their debts in whole or in part.
               The U.S. Trustee program coordinates efforts by
          various bankruptcy trustees to make collections, often
          via public auctions.  Unfortunately, there are no mailing
          lists for these auctions.  Your best source is classified
          ads in your local newspaper.  Or you can ask local
          auctioneers to notify you when they're going to handle a
          bankruptcy sale.
               Government auctions can be a boon to businesses as
          well as to consumers.  You might, for example, buy low-
          cost company cars, trucks and vans.  Sometimes you can
          find odd pieces of equipment that are not readily
          available through traditional marketing channels.  If
          you're a business owner looking for equipment you can use
          in your business, don't neglect bankruptcy auctions as a
          source for furniture, fixtures, and office machinery. 
          Business items are often auctioned after a bankruptcy or
          a loan default in which a bank or other lender takes
          possession of property pledged as collateral. 
               Here are some brief descriptions of recent
          bankruptcy auctions:
               * The U.S. Bankruptcy Court, administering the
          liquidation of Russ Togs, Inc., served notice of an
          auction of 280,000 garments under the "Russ," "Crazy
          Horse," and "Manhattan" brand names.
               * The Federal Deposit Insurance Corporation (the
          FDIC, which insures bank accounts) and the Resolution
          Trust Corporation (or RTC, the S & L bailout agency)
          advertised a "public liquidation" of desks, lateral
          files, vertical files, swivel chairs and armchairs,
          copiers, plus "3000 other items, from bulletproof glass
          to household furnishings."
               * In 1992, Alexander's, which had been a major
          department store chain for decades, went bankrupt.  The
          U.S. Bankruptcy Court ordered a total liquidation, so a
          public auction of the store fixtures, furniture, phone
          systems, etc. was held in eight stores.
               * On a smaller scale, Mamie's Bakery in West Islip,
          New York, went into bankruptcy, too.  The U.S. Bankruptcy
          Court ordered a bankruptcy auction, putting merchandise
          such as baking ovens, butcher block tables, and walk-in
          freezers up for sale.
               * Recently, the New York Times ran an ad announcing
          an auction designed to prevent foreclosure on A.W.B. &
          Partners, a major fine-art company.  The auction, held at
          a Sheraton Hotel in Smithtown, Long Island, included
          emerald- and diamond-studded bracelets and works of art
          by Chagall and Dali.  If you were willing to play in that
          league, the auctioneer was willing to accept credit
          cards, charging you a 10% buyer's premium.
               Some auction notices merely state that a secured
          creditor is selling items, obviously collateral pledged
          to back a loan that subsequently went into default. 
          Especially in these troubled economic times, you can
          expect frequent ads for auctions of office equipment,
          machinery, furniture, fixtures, etc., which might be
          useful if you operate a business.
               If a retailer goes out of business, you'll likely
          see ads for secured creditors (manufacturers and
          wholesalers) who want to sell new furniture, such as,
          bedroom sets and dining room sets.  Recently, a bank in
          New Haven offered 2,000 Oriental rugs it had repossessed.
               You can find out about such auctions in your local
          newspaper.  As always, attend the preview to inspect the
          merchandise and read the terms of sale.  If you're
          thinking about buying machinery, be certain that it
          works.
          
          
                       Great Buys In Small Packages
          
               Yet another federal agency auctioning property from
          distressed borrowers is the Small Business
          Administration.  The SBA guarantees bank loans to small
          companies; the companies (and often the companies'
          owners) pledge assets as collateral for the loans.
               If all goes well, the businesses will generate
          enough cash to repay the loans.  But usually not all goes
          well, especially with start-up businesses.  If the
          business doesn't perform well, the collateral will be
          seized and sold to facilitate repayment.
               Who sells the property?  Sometimes the bank,
          sometimes the SBA.  Call your local SBA office to ask
          about future auctions.  Also ask which auctioneers the
          SBA uses and which banks are certified or preferred
          lending institutions.  Then, contact those auctioneers
          and banks to ask about SBA auctions.
               You need to be careful, though.  In one recent
          instance, the SBA offered a home in a mountain resort
          community "as is."  Although the home needed a new well
          and a new septic system, this wasn't revealed.  According
          to local gossip, the auctioneer used the threat of a
          lawsuit to silence a neighbor who knew about the defects. 
          So check carefully before bidding.
          
          
