Buying Domains at Bankruptcy Auctions
I spent some time with someone who mentioned that his company filed for a strategic bankruptcy in the past year. Although I have recently come to know this person and his family pretty well in just the past two years, I had known of his company since I was a kid because of his company’s regional television commercials. In fact, I was joking around with him by imitating some of the lines that were frequently used in his commercials.
When we were talking about the bankruptcy, I asked him about his company’s fairly generic domain name (contained part of his brand but would have been defensibly generic since many other companies use the term). He mentioned that it sold for $3,000 in a bankruptcy auction, along with other business assets (both intellectual property and tangible equipment and goods).
After doing some research, it seems the site still gets about 2,000 visits per month and has a ton of back links. I feel the name would have been worth at least $10,000 to a domain investor based on traffic alone. I was a bit bummed because I would have bid on the name had I known about the auction, and I could have used the site for lead generation, which probably would have yielded several hundred dollars in commissions or referrals each month. This was a very targeted business, and customers would spend thousands of dollars on services. Operating this type of business was difficult with this economy, but the leads that continue to come to the site have value – especially since the bankruptcy was fairly quiet.
Long story short is that domain investors should monitor bankruptcy auctions. Toys.com was won in a bankruptcy auction – one that most people didn’t know about at first. A few months ago, I learned of a bankruptcy auction via Google Alert for Friedmans.com and CrescentJewelers.com, two bankrupt jewelry stores whose websites at one time had significant web traffic. I didn’t place a bid on the auction, but it’s good to know about them anyway, especially if you run a jewelry business.
As more and more companies file for bankruptcy, there are bound to be good deals on domain names that people may never learn about. It’s equally important to research the company’s history and customer service situation to prevent buying a hot potato, but in some cases, the quality domain name will outweigh the risk. Bankruptcy auctions would seem to be another source for domain acquisitions.
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