For the latest insolvency news and updates and for ABI membership information, visit ABI World . One common method used for liquidation is to sell property of the estate at an auction. Prior to actually conducting the auction, the trustee or auctioneer will often disclose information about the property to be sold to potential bidders.
Disclosure serves a two fold purpose.
Initially, disclosure helps to garner interest in the property. Once interest has been generated, those interested in purchasing the property can use the information to formulate a competitive bid. Assuming the corporation is profitable, the trustee will want to disclose as much information about the corporation as possible in order to maximize interest in the stock and to obtain the highest price possible. Such disclosure, however, can be disastrous to the corporation and remaining shareholders. Should this information find its way into the hands of the corporation's competitors, the corporation's business may be severely harmed.