RULE 6005-1 APPRAISERS AND AUCTIONEERS - PUBLIC AUCTIONS
Modified 12/1/01
(a) Court Authorization. The estate representative may, with prior Court approval, sell estate property at public auction. Subsequent confirmation by the Court of the auction is not required unless such confirmation is a condition of the initial approval. The notice of intended public sale shall be substantially similar to R.I. Bankr. Form Q. The estate representative shall file a motion to sell the estate assets, and state why a public, rather than a private sale is requested. Any auction advertisement placed by an auctioneer or estate representative shall conspicuously state the bankruptcy case name and number.
(b) Estate Representative. For the purposes of this LBR, the term estate representative shall include a chapter 7 trustee, chapter 11 trustee, chapter 11 debtor in possession, chapter 12 trustee, and chapter 13 debtor.
(c) Qualification of Auctioneer.
(1) An auctioneer shall not be authorized to conduct a public auction of property of an estate without first obtaining approval of his or her employment, filing with the Court a bond in an amount fixed by the United States trustee, and furnishing the United States trustee with a copy of said bond. The bond shall be conditioned on the faithful performance of the auctioneer's duties and the auctioneer's accounting for all money and property of the estate that comes into his or her possession.
(2) To avoid the necessity of filing separate bonds for smaller auction sales, the auctioneer may file with the Court a blanket bond similarly conditioned in a base amount fixed from time to time by the United States trustee to cover various cases in which the auctioneer may act. The auctioneer shall also provide the United States trustee with a copy of the blanket bond. If at any time the aggregate value of goods in the auctioneer's custody exceeds the amount of the blanket bond, then the auctioneer shall obtain a separate bond or bonds so that the full amount of all goods of various bankruptcy estates in the auctioneer's custody is covered.
(3) As a condition of the employment of an auctioneer in any bankruptcy estate, the auctioneer shall file a sworn representation to evidence the auctioneer's compliance with the requirement that all goods of bankruptcy estates in his or her custody be fully covered at all times by separate bonds or blanket bonds or both.
(4) Auctioneers shall not introduce non-bankruptcy estate items at auctions without the Court's prior approval. An auctioneer employed by an estate representative shall not bid on property of the estate. No buyer's premium shall be charged. Failure to comply with this paragraph shall result in denial of all compensation and/or issuance of sanctions.
(d) Attendance at Auction Sale. The estate representative or a representative of the trustee shall be present at the commencement of the auction sale to respond to questions and to resolve disputes, and is required to remain thereafter only as circumstances warrant and as the trustee deems appropriate.
(e) Expenses and Compensation. Except in special circumstances and by order of the Court, the auctioneer shall bear all expenses of an auction (including labor, cleaning, setting up, lotting, tagging, etc.), except a reasonable expense for advertising. Even when special circumstances have been demonstrated, the only additional expenses that will be allowed are those for which the auctioneer has applied in advance with a set dollar ceiling, unless the additional expenses could not have been reasonably anticipated.
(1) Property Other than Real Property. Except in special circumstances and by order of the Court, with respect to sales of personal property, the auctioneer shall be allowed reasonable compensation not to exceed the following percentages of gross proceeds:
(A) 10% of the first ten thousand dollars ($10,000) or part thereof;
(B) 7% of the next ten thousand dollars ($10,000) or part thereof;
(C) 6% of the next thirty-five thousand ($35,000) or part thereof; and
(D) 5% of the balance.
The above percentage schedule merely sets the upper limit on the auctioneer's compensation and does not define his or her allowable compensation. The Court shall allow only reasonable compensation and may change the percentage amounts. The Court may require the auctioneer to include with his or her application for compensation an itemization of time spent and expenses incurred in connection with the sale.
(2) Real Property. The personal property percentage schedule set forth in paragraph (1) above shall not apply to real estate auctions. With respect to sales of real property, the auctioneer's compensation shall be fixed by the Court and shall reflect the fact that the estate's interest in the sale is limited to the equity over the amount owed to secured creditors. The Court will use as a guide in determining the auctioneer's fair and reasonable compensation the following schedule:
(A) 10% of the first fifty thousand dollars ($50,000) realized in excess of the amount of encumbrances; and
(B) 2.5% of the balance of the equity, with a minimum fee of $500.00, plus pre-approved expenses.
©1998 US Bankruptcy
Court
District of Rhode Island