Bankruptcy of Consignment Stores
The bankruptcy of a consignment store (either reorganization or liquidation) is normally easier and cheaper than the bankruptcy of a classic retailer. The reason is that the debtor does not own the merchandise.
The weak point of the bankruptcy of a consignment store is that most often consignment stores do not follow the rules to ensure that the goods that are on their premises are actually owned by the vendors. When this is not done, then those goods could become subject to a bank's lien or a landlord's lien or be lost to a bankruptcy trustee. So the first thing that consignment store needs is a visit from a good lawyer who can ensure that, by state law, the good actually are on consignment.
Charles Chesnutt