Dealing with Leased Equipment when Going Out of Business
My thinking is that one auction at my site would defray the costs of moving the leased equipment which would add on to what I'm on the hook for with the leasing companies. Or would auctioneer fees just be a wash and it would be better for the leasing companies to take the equipment and go from there? I know none of this equipment is worth what I paid for it but feel I have a chance of at least being able to pay off the leasing companies. I've never done this before so any advice would be appreciated. (I don't need advice on continuing the operation, that decision has already been made).
From contributor S:
A lot depends on the leasing company and the contract. There are some companies, and I won't mention their names, that are bent on taking repossession of the equipment no matter what is owed. Leasing companies that are part of a machinery manufacturer or reseller don't want their used equipment flooding the auction and used machinery market.
That situation would only drive down their new machinery prices and sales. Then there are some that want to repossess your machinery so they can reap the equity you have already built up from paying the lease so far. I am not passing judgment on anyone, but that is just the way that it is. Trying to tell any of them that you are going to save them the cost of repossession is not going to get you anywhere. You need to dig out the agreement you signed when you purchases the machinery. There will be some clause or wording about default and when happens as a result. It doesn't hurt to give the leasing companies a call and ask what they are willing to do for you. Since you have paid back most of the leases and by doing so, built up some equity in the equipment.
I wouldn't let them just repo the machinery. If you can afford it, you might want to consider getting some sort of short term loan and paying off the machines. From the numbers you mentioned, there should be enough profit to cover the loan and make some profit off of the sale of the machinery. There are a few auction companies that also work a lot with the leasing companies. They you may be able to work a deal with them to sell the machinery at auction and from the proceeds pay what is owed. If all else fails there are some auctioneers that will pay off the loan before the auction and take their money back from the proceeds. It really depends what the machinery is worth at auction and what is owed.
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