Buying the domain name of a bankrupt company	1.3/5.0 (3 votes total) Rate: Select 1 - Terrible 2 - Poor 3 - Average 4 - Good 5 - Outstanding
Barry Goggin February 05, 2009

We are hearing about more and more companies going bankrupt in these hard financial times so domain names held by these companies may come on the market in the near future. Trademark domains may be off the table but some of these companies may hold generic domains. So how do you go about finding and buying such a domain name?

Online property

All bankruptcy proceedings involve the creation of an estate, which consists of all legal or equitable interests of the debtor and property. This can be straightforward enough for brick-and-mortar businesses, but what if your company lives in cyberspace? I have talked about the fact that defining online property is tricky. There have been a couple of different rulings that seem pertinent to defining domain names as property in bankruptcy proceedings.

Domain names not property of bankruptcy estate

On April 21, 2000, the Virginia Supreme Court found domain names do not qualify as property of the bankruptcy estate. In explaining the verdict, the court contended that allowing garnishment of domain names could lead to garnishment of other services, such as a prepaid balance on a satellite television customer’s subscription.

This was bad news for small, online business owners; the company’s domain name is often its most valuable asset. Licensed software might not be included as estate property, either. If domain names and licensed software are excluded, many times there is very little left to liquidate or reorganize.

Domain names are property and location can be defined

In Office Depot, Inc. v. Zuccarini, 2007 WL 2688460 (N.D. Cal. 2007), Judge Illston appointed a receiver to take control over and liquidate domain names owned by the infamous cyber squatter, John Zuccarini. On the way, she held that a domain name is property and that property can be located where the domain name’s registry and registrar are located.

How to buy domain names in a bankruptcy

If a company goes bankrupt then the liquidators will control ownership of the domain. You may be able to buy the domain from them assuming they have the mandate to sell the company’s assets. So you can look through the bankruptcy courts of the company’s home state / jurisdiction, start looking for judgments. Once you find who the lawyer is, you can try contacting them and/or the liquidators. The more savvy may wish to put the domain name up for auction but some may be willing to forgo a lengthy procedure.

I haven’t acquired a domain name from a bankrupt company but given the harsh economic times, it is something I am keeping an eye on. There could be some very good deals to be had.

As I have said before, I am not a lawyer so please consult a lawyer if you need legal advice.

Hosting Bookmarks