00Over the course of an auctioneer’s career, they regularly hear the same question from both clients (sellers) and from customers (buyers):

“What happens to the stuff that doesn’t sell?”

Sellers will often ask who is responsible for cleaning up things that might not have any value or sell at any price. In a business closing situation, it’s very common to have items that are too big, too old, too expensive to move, or simply too useless to spark any interest with buyers on auction day. These items are often referred to in the industry as “no sales” or “past lots.” It happens to every auction firm at some point, and the contract with the seller will typically dictate how you answer the question when they ask “what happens to the stuff that doesn’t sell?”

Sometimes buyers want to know what didn’t sell because they were unable to attend the auction sale, and the treasured machine they wanted just might have been passed over. This is the very same (potential) buyer who—when they learn the machine did sell—will go on to tell you how much more they were willing to pay than what you sold it for; that if the buyer stiffs and does not pay to call them—they’ll take it; or ask you to send their information to the buyer, and so on. These situations are usually accommodated relative to the sale circumstances and the people involved. The reality with these types of buyers is if they really wanted the machine, they would have found a way to participate in the auction, and would have been the successful bidder on sale day.

But we’re not talking about the desirable stuff here, this is about the stuff that really won’t sell—the things that really shouldn’t sell for anything more than scrap value; the kind of equipment we cringe at on the initial walk-through of the facility; the strange, one-off, purpose-built items made just for that widget press, and that widget press only.

Some buyers are scrappers, and will gladly take things away, paying a nominal sum and providing the labor, tools, and equipment to extract expired assets from the facility. From hand tools to torches to bulldozers, we have seen varying methods to clear these types of assets from the building. There is an exchange of money from the buyer (scrapper) to the seller, and hopefully when the truck crosses the scale the scrapper has made a tidy profit for his labor and expertise. Trustworthy scrappers are often a welcome insurance policy to help clean up an industrial auction site.

Curious about what they might do with their collateral, I was recently asked by a bank to inspect a facility owned by one of their borrowers. This place had run afoul with the EPA for various violations and had been shut down. As I watched the Tyvek-suited EPA specialists working away, I was a bit concerned for my safety. “Do we need safety gear,” I asked. “Er, no. These guys are just over-reacting. It’s the government you know. They are here to help,” the owner said with a thick layer of sarcasm. Not planning on eating (or touching) anything, we progressed through a multi-acre, multi-building site that was stuffed with industrial surplus and countless tons of various chemicals (hence the EPA).

That was the moment I realized I had stumbled upon what can only be termed as an auction graveyard. I had discovered that mysterious place where items that no one could possibly want went when the auction was over. This was not a scrap yard, not a dump, but this was a vast graveyard of cast-off equipment. Cyclones, old welders, tanks of all shapes and sizes, ovens and dryers, conveyors and fryers, an old bicycle frame and dozens of dead forklifts. Like Rudolph’s Island of Misfit Toys, this was a place full of the unwanted. It was fascinating.


“That’s a crawler conveyor from a coal mine, I got it for $300,” the owner said as we strolled past a hulking pile of rusty parts covered in overgrowth. Perhaps he only paid the seller $300, but then he paid to rig it, ship it and unload it. And here it sits—a rusty old pile of iron covered with weeds, no salvageable parts visible. Why didn’t this just go to the scales and get cut up? Why was the owner so proud he only paid $300 for this conveyor when it simply sits, rusting away in the elements year after year? Where is the economic gain?

Industrial hoarding is not unlike personal hoarding. Imagine the hoarder that medics found expired in her home; a home packed so tightly with stuff they had trouble navigating the piles to locate the body. “Somewhere in the tons of old magazines, boxes of cotton balls salvaged from pill bottles, piles of empty egg crates, junk mail piled to the ceiling, eight-track tapes and brand new clothes piled high but never worn; Mrs. Jones expired with her belongings,” read the obituary. Dumpster load after load of items the deceased felt she just had to have.


“I got this one from a sale at XYZ Company. It’s some kind of heat tunnel. I understand it cost them $27,500 but I got it for $2,000,” he beamed with pride. When I asked what he was going to do with this particular piece of equipment, he was certain he could dry powders with it. Yet there it was—unplugged and idle—the only dry powder around being the accumulation of dust provided free of charge by father time.

It seems that deciding which belongings to keep, and which to throw out, makes many hoarders anxious. Hoarders worry they will make the wrong decision and might discard or waste something that could prove useful one day. In an unconscious effort to avoid the anxiety, they do nothing, allowing their stuff to continue to pile up. Some hoarders might refuse to throw items out because they anticipate the grief that will follow the loss of the item. While it is true that people with hoarding problems often see value in things that other people don’t, the real problem is the volume of possessions—and how they are organized—not their actual value.

This is what I encountered on my journey through the auction graveyard; the volume of items that had accumulated was astounding. I’ll suggest the industrial hoarder also sees value in things that other people don’t, with the express hope that someday – somewhere – there will be a buyer for the these things.  Like the individual hoarder, the real problem becomes the volume of things accumulated as the “no sales” simply pile up.

However, the mere accumulation of equipment without an express path to a profit was not what brought this particular company into the sights of the EPA. They were also accumulating chemicals, over 10 million pounds according to EPA reports. Various chemical manufacturers would sell off-grade compounds and chemicals to this firm, who—in theory—would then repackage and/or re-sell them to overseas buyers. “I can sell one supersack of that product and pay for a whole truckload of it from ABC Cosmetics” is the intended business model.  The hoarder then stores the remainder of the truckload as potential profit. The EPS’s involvement was not sparked by the act of selling off-grade compounds and chemicals, but the remainder of the truckloads that never got sold. These became part of the collection that grew like a cancer.

According to EPA reports that discuss the clean-up effort, various chemical manufacturers who sold their off-specification compounds to this company had “voluntarily” picked up 6 million pounds of chemicals they had thought were gone forever. One would assume that “voluntary” was under the impending liability hammer of the EPA, a point that is not typically intimated in the reports. Corrosive and flammable liquids—which made up some of the more than 5,500 drums and small containers found—were removed, and more than 2,800 tons of chemicals were disposed of off-site by the EPA. After all this, an estimated 7 million pounds of hazardous materials remain: sacks of biphenyl A; titanium dioxide pigment; polyvinyl alcohol; and countless packages and drums of unknown chemicals still being tested in makeshift onsite labs set up by the EPA.

In 1997, the same owner and company—operating from a different location—was the subject of a federal EPA cleanup project. Between 1997 and 1999 the EPA supervised a $6 million emergency project to dispose of 21,000 drums of chemicals. How can this happen twice?

If the EPA can strong-arm voluntary recovery of chemicals in this case, can the same theory be extended to an auction company that might have sold a drum of what was believed to be hydraulic fluids, or a piece of equipment later deemed to have handled an environmentally sensitive substance in a prior life? Can the auction company be in the crosshairs of the EPA hammer in situations like these? According to business attorney Garry Graber of Hodgson Russ, a significant differentiator is whether or not the sale was a principal deal (owned by the auctioneer) or a commission sale. Clearly, when the auctioneer owns the things that are transferred at the auction sale there is a chain of title that won’t go away with an “as-is, where-is” declaration by the auctioneer. In such cases it is more probable the auctioneer could be held liable to some extent. When these types of substances and/or items are sold as a result of a commission sale, things can get murky. Along with clear declarations of the agency relationship between the seller and auctioneer, Graber suggests tight language in the auction agreement with the seller that indemnifies the auction company from any environmental liability that might stem from conducting the auction sale. Even then, if the auctioneer had knowledge, or even reason to have known there might be an environmental problem, there could be liability to the auctioneer. Under certain circumstances, professionals can be held to higher standards, and later attempting some type of ignorance defense might not be a good strategy. You cannot consciously avoid knowledge of relevant environmental conditions that should have been known to a professional had they asked the questions prior to the offering.

03“This one…this is a hammer mill I bought from the New York Chocolate factory in Fulton, NY,” he lamented.

I knew. I sold it to him on September 15, 2010. “Lot #1263 - Disassembled Micro Pulverizer / Hammer Mill - Located In Bldg. #58 2nd Floor - 2280 RPM, 40 HP Motor” reads the catalog. He paid $1,500.

The auction graveyard is full of stories, good and bad. The items of utility having been resold years ago yield to the skeletons of clutter that define industrial hoarding. Industrial auctioneers should take a longer view on just who it is that is taking those misfit toys from their auction site. In the case of the subject company, such diligence might have saved some of the untold millions of dollars these two EPA projects have cost the public. Careful consideration now could prevent a very expensive and unwanted surprise should your buyer run afoul of the EPA or similar agency.

Auction Graveyard was originally published in "The Podium," Fall 2017, official journal of the Industrial Auctioneers Association. David Fiegel is the founder of Blackbird Asset Services, a boutique auction and appraisal firm that specializes in secured creditor and bankruptcy auctions and appraisals, particularly in the industrial sector. Blackbird is a proud member of the Industrial Auctioneers Association (among others). You can reach David at 716-632-1000 or by email at This email address is being protected from spambots. You need JavaScript enabled to view it..

Auction Roadies

Now the seats are all empty

Let the roadies take the stage
Pack it up and tear it down

They're the first to come and last to leave
Working for that minimum wage
They'll set it up in another town

—Jackson Browne and Bryan Garofalo, “The Load-Out” (1977)

Box JumperWhat I learned at CrossFit today, I actually knew from a prior experience. Our workout this morning was a 20-minute series of weight lifting, kettle bell swings, and box jumps (simplified for ease of reading). The box jump is just what it sounds like, and is shown in the photo. Quite simply, you jump on the box, get off and repeat. It’s not particularly difficult, but if you miss the box it can really hurt.

20151029 Monument Farms Dairy 240x160

This past July, my wife Margaret and I embarked on a multi-day cycling trip through the rolling hills of Western Vermont. One day, as we headed north on James Road near Weybridge, we had some of the best views of our three-day tour. This particular ridge boasted breathtaking views of the High Peaks Adirondack range in New York to our left, and the Green Mountain range of Vermont to our right—at the same time. Having been out in the hills for a couple of hours in the 90 degree sun, it seemed like a good place to stop, when we happened upon the intersection of James Road and Weybridge Road. It wasn’t so much the Norman Rockwell nature of this little intersection that captured us, nor the nice park we found that drew us to explore a bit more, it was Monument Farms Dairy.

198 - Secured-Creditor-Checklist-240x160The Uniform Commercial Code (or UCC) was introduced in the 1950s with the goal of harmonizing state laws pertaining to commercial transactions of personal property. Despite that goal, each state still maintains its own version of the code, which will vary slightly from jurisdiction to jurisdiction.

Article 9 is a specific component of the code that governs security interests in personal property as collateral to secure a debt. This pertains to how a security interest is created and how to give priority when multiple claims to the same collateral occur.

When a debtor defaults on its obligation, the creditor may repossess and dispose of the collateral. A creditor can sell collateral in a public auction or private sale as long as notice is given and the disposition is commercially reasonable.

foodtruckthumbThe food truck craze is in high gear, and we recently had the opportunity to visit OutFront Food Trucks, a company that is an industry leader in the engineering and build-out of all kinds of food trucks.

With their help, we put together a video that summarizes the process of building a food truck to give a sense of how much time, money and effort goes into each of these traveling restaurants.

It won't be long before demand gives way to a secondary market, and we want to stay on the forefront of this trend, adding this element to our already robust machinery, equipment and real estate industry knowledge.

fracking equipmentAugust 27, 2015 - Section 362(d)(1) of the US Bankruptcy Code provides relief from the automatic stay “for cause including the lack of adequate protection.” Section 361 defines adequate protection as “providing either cash payments, an additional or replacement lien or ‘such other relief as to provide an indubitable equivalent…of interest in such property’.” A secured creditor that is over-secured is often denied a motion to lift the automatic stay based on 362(d).

In our blog The High Cost of Cheap Gas, we reported that this year alone, oil and gas companies have accounted for one third of the corporate-debt defaults worldwide. Companies like SandRidge Energy Inc., and Halcon Resources Corp. have had to issue new secured debt, which will make it difficult for unsecured bondholders to be repaid if the companies are in default. The markets are ripe for some really big defaults from the energy sector, and also those suppliers to the energy industry.

NAA Conference & Show 2015 fun auctionJuly 23, 2015 - As a newcomer to the industry, the 66th International Auctioneers Conference & Show, held in Dallas, Texas was to be my introduction to the world of auctioneers. I'm a marketing guy by nature. I've spent the last 15 years working for various financial institutions, primarily in marketing or digital marketing/product related roles. I had no idea that for the last 66 years, the Conference & Show existed.

We had planned to arrive Tuesday, but mother nature decided to thwart those efforts. Our connection through Chicago was canceled and there was no hope of re-routing. That meant no Eddie Deen's Ranch for me. After another pre-dawn wake up on Wednesday, the planes were on time and I was on my way.

Intangible Asset ValueThe main focus of our practice at Blackbird Asset Services is clearly in the machinery and equipment space selling and valuing (primarily) industrial assets. However, there are often times in this business where intangible assets such as patents, trademarks, licenses and even customer data come into the equation. Many an instance has unfolded where “hidden” value was unlocked by the sale of an intangible asset that almost went unnoticed. In other instances those assets aren’t so hidden.

RadioShack, a stalwart of American electronics retail stores, filed Chapter 11 in February 2015 after a long period of financial distress. Once a bastion of the do-it-yourself radio and electronics era, RadioShack had simply failed to keep up with the trends of the new millennium. Last month a deal was finalized for Standard General to purchase the remaining assets of RadioShack for $26.2 million. This includes the RadioShack name as well as the data for 67 million customers.

GPS in Construction and AgricultureJuly 2, 2015 - By now The Global Positioning System (GPS) is a household name. GPS receivers are integrated into everyday devices: cars, phones, watches, even golf balls. Originally developed for military purposes, the United States government created and maintains the system and also makes it freely accessible to anyone with a GPS receiver. With the prevalence of the GPS new applications arose, such as the ability to automate machinery, even to be driverless. 


GPS enabled tractors, earth movers, excavators and other equipment are all part of a shift to increase automation. Combining GPS and automation software, operators can monitor multiple machines from a remote location.In a driverless scenario, operators can command machines to perform tasks like accelerating, braking, steering and also have the ability to implement sensors to detect obstacles.