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Buying Domains at Bankruptcy Auctions

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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.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (14)

    Ron

    Nice post!

    I was thinking the same thing when I saw a news story about New York’s Tavern on the Green going into bankruptcy and closing it’s doors on New Year’s Eve; Tavern On The Greens was a restaurant that once made over $38 million a year (they are trying to sell the rights to the name … and I wondered if they had their domain name up for grabs: TavernOnTheGreen.com).

    According to the story, the name “Tavern On The Green” is currently in Federal court (I’m sure the domain name will come with use of the name as well – one of the companies fighting to get rights to use Tavern On The Green already have a plan b: “Tavern In The Park” … which they already own TavernInThePark.net)!

    Happy New Years!

    December 31st, 2009 at 2:59 pm

    Ariel Ozick

    Any tips on where to find lists of bankruptcies?

    December 31st, 2009 at 3:08 pm

    M. Menius

    Friedman’s used to run lots of TV ads here in the Greensboro, NC area. I have never considered what happens to the TM interest (or domain name) of a once well known, yet bankrupt company.

    Since there may be substantial residual traffic still coming, I wonder if utilization of the domain for “jewelry sales” purposes would carry any legal complications. I’m thinking the bank would own (or resale) the actual trademark and related domains since those might be considered intellectual assets or property that could be liquidated to pay creditors.

    December 31st, 2009 at 6:30 pm

    bruce J tedeschi

    Brilliant…. WOuld have never thought of this.

    January 1st, 2010 at 9:07 am

    whoknows

    M. Menius,

    That is what I was wondering as well. May need to contact a domain lawyer to find out. There may be some great opportunities found in bankruptcy auctions, but I want to know what the legal stuff is so I know I don’t treed into any trademark or intellectual assets troubles.

    January 1st, 2010 at 11:51 am

    Elliot

    Many of these auctions also sell trademarks and other intellectual property.

    January 1st, 2010 at 12:08 pm

    Mitch

    Systemax has been busy purchasing the brands (and domain names) of computer/electronics giants that go under. Circuit City/CompUSA, for example.
    http://www.circuitcity.com/sectors/opt-outv2.asp
    http://www.compusa.com/sectors/aboutus/index.asp

    January 1st, 2010 at 12:17 pm

    Steve M

    Happy New Year Elliot.

    Thanks for the great job you do all year long.

    January 1st, 2010 at 12:24 pm

      Elliot

      @ Steve

      Happy new year to you as well! It’s usually a pleasure to write on my blog :)

      I always appreciate your comments.

      January 1st, 2010 at 12:26 pm

    Amanda

    Thanks for the tip! How did you set up your Google Alert? Just for “domain auctions”?

    January 1st, 2010 at 5:41 pm

    Ross

    Problem is actually finding the auctions because these are not usually highly publicized things unless its a huge company. Also on top of that most of these auctions do not usually just sell the domain itself but rather with rights to names ect., thus driving up the price.

    Taking in all of these factors you almost have to be only a couple of degrees away from people that know about the auction. Otherwise they just right under your nose just like they already do everyday.

    January 1st, 2010 at 6:35 pm

    Charles Carreon

    Excellent post, Elliot, and all the more important due to the Escom Bankruptcy that puts the Sex.Com domain under a bankruptcy trustee’s control.

    March 18th, 2010 at 8:37 am

    Syed

    I dont agree at all…I bought .co domains typos and they are all performing good…these domains are not typos but co part of abc.co.uk or abc.co.in….

    July 30th, 2010 at 10:26 am

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