TexasRebel said:
BAM converted the consigned items to inventory by purchasing the consignment in the buyout to cover the ex-franchisee debt. The consigner still has to pay the consignee.
Was it handled properly? Not without an independent appraisal of the items or at least specifically telling anyone that's what the plan was.
Not how it works, and if that was what happened then BAM and the new franchisee would have been claiming that. They are not and never have. That said, BAM cannot purchase the consignment to cover the original franchisee debt because the consignment is not the property of the original franchisee. Only the consignment *contract* belonged to original franchisee, and that contract conveyed with the franchise. That contract is itself not an asset to cover debt either, because it is merely a right to sell and take a cut. It has no book value unless and until a sale is made.
The consignment contract was tied to the franchise and went along with it to BAM and then the new franchisees when BAM forced the seizure and sale. BAM cannot buy the consignment items from the original franchisees and have them pay Mansell his share because BAM, in taking over the franchise, became the contract holder and consignee. They took over all assets and liabilities, including any outstanding payments to Mansell for previous sales (he was paid on a monthly basis for any sales in the previous month) and the right to sell the remaining consignment for a share of the sale price. If they wanted to convert the consignment to inventory, they would have had to have bought it from themselves at market price and paid Mansell because the original franchisees were no longer a party to the consignment contract.
And we know this is how everyone saw it, or at least should have. In the video of the handoff of accounts in the store when BAM's agent showed up to take possession of everything, they were told by the original franchisee, "I still owe him money," because sets had been sold but the regular agreed upon payment date had not come yet. Once BAM and the new franchisee took possession of the store and accounts, "I still owe him money," turned into, "
You owe him money," which they agreed to on camera in that conversation. At no point did BAM or the new franchisees ever pay for the consignment.