Going out of Business
Kentucky Laws on Going Out of Business/Fire/Moving/Lost Our Lease Sales
As used in KRS 365.410 to 365.480 and 365.992:
(1) "Going out of business sale" means any sale, whether described by such name or by any other name such as, but not limited to, "closing out sale," "liquidation sale," "lost our lease sale," "forced to vacate sale," held in such a manner as to induce a belief that upon disposal of the stock of goods on hand, the business will cease and discontinue at the premises where the sale is conducted.
(2) "Sale" means a transfer of goods from the seller to the buyer for a price less than that for which the goods were originally offered to the public by the person conducting a sale hereunder.
(3) "Fire sale" means any sale held in such a manner as to induce a belief that the goods are being sold at a reduction in price due to damage by fire, smoke, water or otherwise.
(4) "Cost" means that price which the seller actually paid for goods.
(5) "Goods" means all goods, wares, merchandise and other personal property, excepting choses in action and money.
(6) "Person" includes a person, firm, corporation, partnership, association or two (2) or more persons having a joint or common interest.
(7) "Removal sale" means any sale held in such a manner as to induce a belief that upon disposal of the stock of goods on hand, the business will cease and discontinue at the premises where the sale is conducted, and thereafter will be moved to and occupy another location.
365.415 License requirement for fire, removal, and certain other sales
No person shall advertise, represent or hold out to the public that any sale of goods is an insurance, bankruptcy, mortgage foreclosure, insolvent's, assignee's, executor's, administrator's, receiver's, trustee's, removal sale, going out of business sale or fire sale unless he first obtains a license to conduct the sale from the county clerk of the county in which he proposes to conduct the sale.
365.420 Application for license; bond
Any person proposing to conduct any sale governed by KRS 365.410 to 365.480 and 365.992 shall file an application in writing and under oath with the county clerk setting out the following facts and information regarding the proposed sale:
(1) The name and address of the applicant for the license, who shall be the owner of the goods to be sold. If the applicant is a partnership, corporation, firm, or association, the name, position, and address of all partners or officers, the address of the principal office within the state, the date and place of incorporation or organization, and whether controlling interest in the firm or business was transferred within the twelve (12) months prior to the date of the filing of the application.
(2) The name and style in which the sale is to be conducted, and the address of the premises where the sale is to be conducted.
(3) The dates and period of time during which the sale is to be conducted.
(4) The name and address of the person who will be in charge and responsible for the conduct of the sale.
(5) The nature of the occupancy where the sale is to be held, whether by lease or otherwise, and the effective date of termination of the occupancy.
(6) A full explanation with regard to the condition or necessity which is the occasion for the sale, including a statement of the descriptive name of the sale and the reasons why the name is truthfully descriptive of the sale. If the application is for a license to conduct a removal sale, it shall also contain a statement setting forth the location of the premises to which the business is to be moved. If the application is for a license to conduct a fire sale, it shall contain a statement as to the time, location and cause of the damage.
(7) A full, detailed and complete inventory of the goods that are to be sold, which inventory shall:
(a) Itemize the goods to be sold and contain sufficient information concerning each item or class of items, to clearly identify them. That information shall include, but not be limited to, the quantity, make, brand name, model, and manufacturer's number, if applicable. The itemization shall be set out in forms prescribed by the Attorney General pursuant to administrative regulation. The Attorney General may design a particularized form to be used for businesses that because of their nature or the type of merchandise offered or sold are better suited to the use of a specialized form.
(b) List separately any goods which were purchased during a ninety (90) day period immediately prior to the date of making application for the license.
(c) Show the cost of each item or class of items of goods and the total retail value of the inventory, together with the name and address of the seller or supplier of the items to the applicant, the date of the purchase, and the date of the delivery of each item to the applicant. The cost listed shall conform with the costs listed on the inventory used for the applicant's most recent federal income tax return adjusted for sales and purchases; and
(8) Provide a good and sufficient bond, payable to the Commonwealth of Kentucky in the penal sum of one thousand dollars ($1,000), with sureties approved by the court judge, conditioned on compliance with KRS 365.410 to 365.480 and 365.992 and, attached to the bond, a verified statement by the owner or his duly authorized agent:
(a) That the sale is for the purpose designated in the advertising of the sale;
(b) That the inventory contains no goods on consignment or not purchased in the usual course of business for resale, on bona fide orders without cancellation or return privileges;
(c) That no goods will be added to the inventory after the application is made or during the sale;
(d) That the applicant or any person with whom the applicant is or has been associated in the business has not conducted a going out of business sale at the same location within two (2) years prior to the date of filing of the application;
(e) That no means have been established by the applicant for continuation of the business at the same location upon termination of the sale in the case of a going out of business sale; and the business described in such going out of business sale is to be discontinued upon termination of the sale and is not to be continued by the same person, directly or indirectly, by partnership, corporation, or otherwise, under the same name or under a different name at the same location for which the inventory for the sale was filed;
(f) That no goods listed in the inventory have been the subject of a licensed sale conducted within one (1) year prior to the date of the application, unless they were damaged by fire, smoke, or water while in the possession of the applicant.
365.425 Approval of Cabinet for Health and Family Services required
No application for a going-out-of-business sale shall be accepted by the county clerk if the sale involves foods or drugs damaged by fire or other casualty unless the approval of the Cabinet for Health and Family Services has first been obtained.
365.430 Issuance of license; scope of authorization
(1) The clerk, upon receipt of an application giving fully and completely the information under oath as required by KRS 365.420 and upon receipt of the fee provided for in KRS 365.445, shall issue a license to the applicant, authorizing the applicant to advertise, represent, and sell the particular goods so inventoried at the time and place stated in the application and in true accordance with the provisions of KRS 365.410 to 365.480 and 365.992. The license shall be issued in duplicate and shall bear a number and date of its expiration. A license issued under KRS 365.410 to 365.480 and 365.992 shall be granted and valid only for the sale of the inventoried goods which are the property of the licensee. The license shall apply only to the premises specified in the application, and it may not be transferred or assigned. If a licensee under KRS 365.410 to 365.480 and 365.992 is engaged in business in other locations, advertising or offering of goods on behalf of the other locations shall not represent or imply any participation in or cooperation with the sale on the premises specified in the license, nor shall any advertising or other offering of goods on behalf of the premises where the licensed sale is being conducted represent or imply any participation in or cooperation with the sale at other locations. No license under KRS 365.410 to 365.480 and 365.992 shall be issued to any person:
(a) To conduct a sale in the trade name or style of a person in whose goods the applicant for the license has acquired a right or title thereto within twelve (12) months prior to the time of making application for the license.
(b) To continue a sale in the name of a licensee under KRS 365.410 to 365.480 and 365.992 whose goods the applicant acquired a right or title while the sale is in progress.
(2) Paragraphs (a) and (b) of subsection (1) shall not apply to any person who has acquired a right, title, or interest in goods as an heir, devisee, or legatee or pursuant to an order or process of a court of competent jurisdiction.
365.435 Record of licenses; refusal of license, appeal
Every clerk to whom application is made, shall indorse upon the application the date of its filing, shall preserve the same as a record of his office, and shall make an abstract of the facts set forth in the application in a book kept for that purpose, properly indexed, containing the name of the person asking such license, the nature of the proposed sale, the place where the sale is to be conducted, its duration, the inventory of the goods to be sold and a general statement as to where the same came from and shall make in the book a notation as to the issuance or refusal of the license applied for together with the date of the same. The clerk shall indorse on the application the date the license is granted or refused, and the application and abstract shall be prima facie evidence of all statements therein contained. If the county clerk refuses to issue the license, the applicant may apply to the county judge/executive for a hearing. The clerk shall notify the county attorney who shall appear in opposition to the issuance of the license.
365.440 Bond held three years, surrendered when
Every bond given in connection with any sale under KRS 365.410 to 365.480 and 365.992 shall be kept by the county clerk of the county in which the sale is conducted until the expiration of three (3) years from the final date of the sale as filed, and shall then be surrendered to the principal if he has so requested, otherwise to one (1) of the sureties. If at the expiration of three (3) years the clerk has reason to believe a pending court action relates to the bond, he shall retain the bond until final disposition of the action.
365.445 Duration of license; renewal; fee
A license to conduct a sale issued pursuant to KRS 365.410 to 365.480 and 365.992 shall not be issued or valid for a period of more than thirty (30) days from the start of the sale, and the sale may be conducted only during the period set forth in the license. The license may be renewed not more than once for a period not to exceed thirty (30) days upon affidavit of the licensee that all of the goods listed in the inventory have not been disposed of and that no new goods have been or will be added to the inventory previously filed pursuant to KRS 365.410 to 365.480 and 365.992, by purchase, acquisition on consignment or otherwise. The application for renewal of the license shall be made not more than thirteen (13) days prior to the time of the expiration of the license and shall contain a new inventory of goods remaining on hand at the time the application for renewal is made, which new inventory shall be prepared and furnished in the same manner and form as the original inventory. No renewal shall be granted if any goods have been added to the stock listed in the inventory since the date of the issuance of the license. A fee of twenty-five dollars ($25) shall accompany an application for the license and for each renewal of a license.
365.447 Limitation on acquisition of permits for going out of business sales
An individual, partnership, corporation, association, or other firm shall not acquire more than two (2) going out of business sale permits during a four (4) year period, excluding renewals awarded pursuant to KRS 365.445, unless the Attorney General determines after investigation that there is a legitimate business purpose for awarding the applicant a subsequent permit. The Attorney General may charge the applicant the cost of the investigation. The Attorney General shall promulgate administrative regulations setting out the application to be used, the procedures to be followed, and the charges to be assessed the applicant to initiate and conduct the investigation. The procedures to be used shall include a process that meets due process requirements, including an administrative hearing conducted in accordance with KRS Chapter 13B.
365.455 Posting of application for license; advertising regulations
A copy of the application for a license to conduct a sale under KRS 365.410 to 365.480 and 365.992, including the inventory filed herewith, shall be posted in a conspicuous place in the sales room or place where the inventoried goods are to be sold, so that the public may be informed of the facts relating to the goods before purchasing same, but the copy need not show the cost price of the goods. The duplicate copy of a license shall be attached to the front door of the premises where the sale is conducted in such a manner that it be clearly visible from the street. All advertising relating to the sale shall prominently state the final date of the sale and the number of the license. All such advertising shall be confined to or refer only to the address and place of business specified in the inventory as to be discontinued.
365.460 Removal of goods from licensed premises; effect
Any removal of the goods included in an application from the place of sale mentioned in the application shall cause the goods to become disqualified for inclusion in a going out of business sale, removal sale or fire sale and no license thereafter shall be issued for the conducting of a sale of any of such removed goods at any other place or places.
365.465 Additions to stock for purpose of sale prohibited; evidence
No person proposing to conduct an insurance, bankruptcy, mortgage foreclosure, insolvent's, assignee's, executor's, administrator's, receiver's, trustee's, removal sale, going out of business sale, or fire sale under a license as provided in KRS 365.410 to 365.480 and 365.992 shall order any goods for the purpose of selling and disposing of the same at the sale. Any abnormal purchase and additions to the stock of goods within ninety (90) days prior to the filing of the application for a license to conduct the sale shall be presumptive evidence that the purchases and additions to stock were made in contemplation of the sale and for the purpose of selling the same at the sale.
365.475 Law inapplicable to judicial or farm sales
The provisions of KRS 365.410 to 365.480 and 365.992 shall not apply to sheriffs, constables, or other public or court officers, or to any other person or persons acting under the direction or authority of any court, state or federal, selling goods, wares or merchandise in the course of their official duties. Nor shall the provisions of KRS 365.410 to 365.480 and 365.992 apply to any bona fide farmer who holds any complete or partial dispersement sale of any land, farm machinery, livestock or any other farm implements or produce.
365.480 Injunctive relief; civil penalty
(1) The Attorney General may enforce the provisions of KRS 365.410 to 365.480 and 365.992 by civil action for injunctive relief in any court of competent jurisdiction. In such action to obtain said injunction it shall be sufficient to allege and prove that a violation of KRS 365.410 to 365.480 and 365.992 has occurred or is about to occur, and it shall not be necessary to allege or prove that any person has been misled or deceived by any advertisement or sale, or that any person has been damaged or sustained any loss as a result of any violation of KRS 365.410 to 365.480 and 365.992.
(2) When KRS 365.410 to 365.480 and 365.992 are enforced by the Attorney General through civil action, he may ask for and the court may assess a civil penalty for the benefit of the Commonwealth, not to exceed the sum of two thousand dollars ($2,000), said civil penalty to be in lieu of all penalties set forth in KRS 365.992.