Auctioneers Must Disclose Buyer’s Premium in Bankruptcy

A premium that auctioneers charge buyers in a Chapter 7 liquidation must be disclosed to a court at the time their services are sought, the U.S. Bankruptcy Court for the Central District of Illinois held.

Because it’s property of the estate, a bankruptcy court must approve the buyer’s premium, which has become a “common tool” used by auctioneers, Judge Mary P. Gorman wrote Jan. 3.

The premium is a fee calculated as a percentage of a final sales price and paid to the auctioneer in addition to the commission charged to the seller.

The buyer’s fee is subject to debate, ...