How we helped a client carefully acquire assets at bankruptcy auctions
Whatever can be purchased at bankruptcy auctions at a significant discount: real estate, transportation, jewelry, and securities. But how easy it is to fall into the hands of unscrupulous bidders, wasting time and money and never receiving the desired outcome.
From practical experience, we know of a situation in which a "technical failure" occurred during the presentation of price offers or the summing up of results on the electronic trading platform, which was fictitious in nature and prevented a bona fide bidder from bidding.
The ramming scheme is also well known, in which a malicious bidder attempts to knock other bidders out of the auction by making numerous targeted offers, essentially competing with himself. This can raise the price of the desired lot significantly, and it is then abandoned in favor of "his" bidder, who has offered the next best price.
Our client has long had his eye on an intriguing asset in the form of real estate, despite not having any particular expertise in the area of bankruptcy or involvement in trading procedures based on the electronic trading platform. The financial manager in one citizen's bankruptcy case listed real estate in a Belgorod region investment-friendly neighborhood for sale. At first, the cost was exaggerated. This occurs frequently because the creditors of the debtor hope to sell the property for a higher price in order to satisfy all of their claims. But in reality, this is not the case because the property is sold for very little considering the low liquidity and turnover.
The client waited until the first and subsequent auctions had ended with our steadfast support and direction. Before the initial phase of the public offering, we verified his identity on the online trading platform, prepared an auction participation application, and started to bide our time until the price dropped while also noting the shortening auction durations. We had to be quick and accurate when applying to be in the auction. This was due to the public offer's urgent nature, the short window of time that was allowed for applications to be accepted, and the requirement to pay the deposit. It was crucial to move quickly above other prospective buyers and make the best offer on the property, one that suited our client's budget. In order to achieve this, we made sure to continuously monitor the website of the electronic trading platform over the Internet and kept track of the quantity of applications that were submitted. This allowed us to submit our application, which included a price offer, right up until the very end of the relevant stage of the public offering. We made a price offer on the electronic trading platform and paid the deposit in a single day after waiting for the most comfortable and lowest reduction in the initial selling price.
Our client was pronounced the winner by the financial manager. However, the tale of our interactions with him doesn't finish there. It came to light that the financial manager had permitted the bailiffs to make arrests and place restrictions on the property up for sale at the time of the auction, which could make re-registration with the registration authority extremely difficult. We contacted the financial manager and the bailiff service and held numerous meetings, negotiations, and business correspondence. And the property's geographical isolation didn't end up being a barrier.
As a result, the encumbrances on the property in the Unified State Register of Real Estate were removed, and the buyer paid the property in the amount of several tens of millions of rubles on time. But the financial manager evaded the transfer of the property and keys for unknown reasons. In addition to these issues, we encountered the manager's reluctance to transfer documentation for the technical connection of electrical networks to the building. This would prevent the new owner from renewing the contract for the power supply of the production areas.
A genuine threat of complaints and multi-million lawsuits in the form of written claims to the financial manager enabled us to finally resolve the situation in our client's favor. The property has been re-registered and is now the legal property of a satisfied client.