Bulk Sales Escrow Law and Legal Definition

“Bulk sales escrow” is a type of escrow agreement placed on the sale of inventory, business assets or an entire company. The escrow serves to protect the interests of unsecured creditors. It eliminates the risk that the seller of the assets will use the proceeds from the sale for purposes other than paying debts or taxes owed. The escrow agent holds the proceeds until the sales are final and then gives them to the creditors. If a business has acquired too much debt in its activities, a bulk sales escrow is introduced to ensure that the business does not spend the money it receives on still more bad ventures.