Brian Madigan LL.B., Broker
BRMadigan@iSourceRealEstate.com

RE/MAX West Realty Inc.,
Brokerage
Independently owned and operated

96 Rexdale Blvd. 
Toronto, Ontario 


Phone: 416-745-2300
Toll Free: 1-888-507-0817

 

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Due Diligence under the Bulk Sales Act

September 7, 2013 - Updated: September 7, 2013

  

Identifying the Material Facts (Bulk Sales Act)

 

The real estate practitioner should be aware that in order to close the deal, the seller must deliver Form 4, a Statement of Affairs under the Bulk Sales Act.

 

It deals with the assets that are included and those excluded. It also sets out the liabilities. While these documents are completed and exchanged by the lawyers closing the transaction, they are nevertheless the documents which are the subject of the transaction and need to be addressed in every transaction.

 

To a reasonable extent, they constitute the due diligence checklist for the business broker. This is the information which needs to be investigated, identified and verified. These are the material facts in the sale of a business.

 

Once clarified, they can form the basis of the agreement to be negotiated between the parties.

 

Here’s a summary of the Form:

 

FORM 4

STATEMENT OF AFFAIRS

 

Bulk Sales Act

 

(Section 8 (2) b)

 

 

 

Assets included in the Sale in Bulk

 

a) Amount of the proceeds of the sale

 

Assets not included in the Sale in Bulk

 

b) Stock-in-trade at cost price not exceeding fair value

c) Trade fixtures, fittings, utensils etc.

d) Book debts-                 Good,

                                        Doubtful,

                                        Bad 

 

               Estimated to produce

e) Bills of exchange, promissory notes etc.

f) Cash in bank

g) Cash on hand       

h) Livestock

i) Machinery, equipment and plant

j) Real estate

k) Estimated value of securities in hands

l)  furniture

m) life insurance policies

n) Stocks and bonds

o) Interest in estates

p) Other property, viz.

 

               Total

 

Liabilities

 

q) Unsecured trade creditors

r)  Secured trade creditors

s)  Preferred creditors

t)  All other liabilities, except contigent liabilities set out below

 

               Total

 

               Surplus or deficiency

 

Contingent Liabilities

 

u) Liabilities under endorsements and guarantees

v) All other contingent liabilities

 

               Total

 

 

 

 

 

                                       

                            

Brian Madigan LL.B., Broker

www.iSourceRealEstate.com


Tagged with: material facts sale of business bulk sales act ontario law
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Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

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