Technical Arts Group LLC et al v. Abe V. Systems Inc. et al

OPINION GRANTING DEBTOR’S MOTION FOR DIRECTED VERDICT PURSUANT
TO FEDERAL RULE OF BANKRUPTY PROCEDURE 7052
APPEARANCES
TRENK ISABEL SIDDIQI & 	PORZIO, BROMBERG &
SHAHDANIAN P.C. 	NEWMAN, P.C.
Richard Trenk, Esq. 	Warren Martin, Esq.
Robert Roglieri, Esq. 	Christopher Mazza, Esq.
Stephen Gengaro, Esq. 	Kimberly Pageau, Esq.
290 W. Mt. Pleasant Ave, Suite 2370 	5 Sylvan Way, Suite 110
Livingston, New Jersey 07039 	Parsippany, NJ 07054
Counsel to Plaintiff 	Counsel to Defendant
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW JERSEY
In Re:
Technical Arts Group LLC,
Debtor.
Technical Arts Group LLC,
Plaintiff,
v.
Abe V. Systems Inc,
Defendant.
Case No.: 25-22241 (VFP)
Chapter: 	11
Adv. Pro. No.: 25-2482 (VFP);
25-2483(VFP) (Consolidated)
Judge: Vincent F. Papalia
FILED
October 15, 2026
Jeanne A. Naughton, CLERK
United States Bankruptcy Court
Newark, NJ
By: ]âtÇ Y|Äzâx|Ütá, Courtroom Deputy
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Vincent F. Papalia
United States Bankruptcy Judge
This matter is before the Court on the motion of Technical Arts Group LLC (“TAG” or
the “Debtor”), the plaintiff in this adversary proceeding and the debtor in this case, for a directed
verdict pursuant to Federal Rule of Civil Procedure 52(c), made applicable in bankruptcy
through Federal Rule of Bankruptcy Procedure 7052, on a narrow issue: whether the UCC
Article 9 sale conducted by defendant Abe V. Systems, Inc. (“AVS” or “Defendant”) was
commercially reasonable. For the reasons that follow, the Court finds that it was not.
I. JURISDICTION
The Court has jurisdiction over this matter under 28 U.S.C. § 1334(b) and the Standing
Orders of Reference entered by the United States District Court for the District of New Jersey on
July 23, 1984, and amended on September 18, 2012 (Standing Order 12-1), and further amended
on June 6, 2025 (Standing Order 2025-2). This is a core proceeding under 28 U.S.C. §
157(b)(2)(A) and (O). Venue is proper in this Court under 28 U.S.C. § 1408. The Court issues
the following findings of fact and conclusions of law pursuant to Federal Rule of Bankruptcy
Procedure 7052. To the extent that any of the findings of fact might constitute conclusions of
law, they are adopted as such. Conversely, to the extent that any conclusions of law constitute
findings of fact, they are adopted as such.
II. INTRODUCTION
As noted, the issue before the Court is whether the UCC (as defined below) auction sale
conducted by AVS on November 19, 2024 (the “Auction Sale” or the “Sale”) was commercially
reasonable under N.J.S.A. § 12A:9-610. The undisputed facts are that the Sale of AVS’s
Collateral (as defined below) was conducted by a group of experienced professionals with
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specialization in the auction sale process generally and in the sale of audio-visual equipment in
particular. Also undisputed is that the Sale was widely marketed to an appropriately targeted
market of potential bidders over a period exceeding forty days. Similarly undisputed is the fact
that TAG did not cooperate with AVS in arranging or allowing the Sale. Those are the principal
facts on which AVS bases its argument -- as to which it bears the burden of proof -- that the Sale
was commercially reasonable “under the circumstances.” Also undisputed are the following
facts:
• 	neither the auctioneer nor the potential bidders had access to the collateral that was
the subject of the Sale (the “Collateral”) for purposes of inspection, removal or
otherwise.
• 	there was no certainty as to the condition, location or existence of the individual items
of Collateral.
• 	the list of the Collateral being sold was outdated (by about a year) and inaccurate.
• 	neither AVS nor its agents could provide any assurances as to the ability of potential
bidders to access and remove any Collateral they purchased.
As a result, potential bidders did not know what equipment they were bidding on, what
condition it was in, whether it existed, where it was located or whether they would be able to
retrieve it if they were a successful bidder. In other words – or more accurately in the words of
AVS’s own expert – this was a “blind” auction which he analogized to “buying a pig in a poke.” 1
He further testified that he “wouldn’t buy it blind,” i.e., the property being auctioned, if he were
a bidder. Transcript of May 15 hearing2 (“T5”) at 181:4-182:2. In this Court’s view, a “blind”
auction in which AVS’s own expert would not participate and which he likened to “buying a pig
in a poke” is, by definition, not a commercially reasonable one. Accordingly, for these reasons
1 “A pig in a poke is a thing that is bought without first being inspected, and thus of unknown
authenticity or quality.” Oxford English Dictionary, 3rd Edition, 2006.
2 Dkt. No. 37
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and the additional ones discussed in more detail below, this Court finds the Sale conducted by
AVS was not commercially reasonable and is void.
III. PROCEDURAL HISTORY
TAG filed a voluntary petition under chapter 11 of title 11 of the United States Code
(“Bankruptcy Code”) on November 18, 2025. Two days later, TAG filed a Notice of Removal
removing the pending state court litigation captioned Technical Arts Group LLC, et al. v. Abe V.
Systems and Abraham Viera Jr., Docket No. BER-C-218-24 (the “Removed Action”) to this
Court. The complaint in the Removed Action seeks, inter alia., a declaration that the auction and
sale of certain equipment and inventory collateral was illegal and of no legal effect. Specifically,
Count Two asserts that the auction sale was not commercially reasonable in violation of N.J.S.A.
§ 12A:9-610. As a result, TAG asserts that it is entitled to recover any losses attributable to the
allegedly improper sale, in addition to the statutory penalties set forth in N.J.S.A. § 12A:9-625.
On the same day it filed the Notice of Removal, TAG also filed a complaint commencing
a separate adversary proceeding against AVS alleging that the Auction Sale was a fraudulent
transfer pursuant to 11 U.S.C. § 548 (“Adversary Proceeding”). By Stipulation and Consent
Order entered February 9, 2026, the parties also agreed that the Removed Action and the
Adversary Proceeding would be administratively consolidated for trial purposes. The parties
agreed that AVS would proceed first with its case on the limited issue of the commercial
reasonableness of the Sale, as to which AVS bore the burden of proof. Dkt. No. 39 at ¶ 87. AVS
commenced its case on that issue on March 9 and concluded on July 7, 2026.3
3 Trial dates were March 9, 11, 12, 13, May 15, 18, June 8, 22 and July 7. The parties thereafter
submitted post-trial briefs, with oral argument conducted on August 4, 2026.
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IV. FINDINGS OF FACT
TAG is a limited liability company whose members originally consisted of KM
Productions NY, Inc. (“KMP”), Quality Audio and Visual Inc. (“QAV”), and AVS (collectively
the “Founding Members”). Dkt. No. 32-1 at 2. Differences arose among the Founding Members
relatively quickly, particularly between the owners of TAG, including Mr. Mignone, and
Abraham Viera, Jr. (“Viera Jr.”), one of the owners of AVS. Id. Ultimately, the owners of TAG
concluded that the partnership was no longer workable, and the parties entered into a series of
agreements to allow TAG to buy AVS out of TAG. Id. at 3.
To effectuate TAG’s purchase of AVS’s membership interests in TAG and equipment
assets owned by AVS, the Founding Members entered into a series of agreements including:
• 	Withdrawal, Redemption and Release Agreement (“Withdrawal Agreement”) whereby,
among other things, TAG repurchased AVS’s membership interests for $415,000, which
payment was made to AVS.
• 	Asset Purchase Agreement (“APA”) whereby TAG (i) purchased certain rental inventory;
and (ii) paid and fully satisfied certain equipment finance obligations and an SBA loan
held in AVS’s name. The aggregate purchase price for these items was $2,839,314.64 to
be paid under the Secured Note (defined below) to AVS.
• 	Secured Promissory Note (“Secured Note”) in the amount of $2,839,314.64 made by
TAG in favor of AVS to secure the purchase price under the APA, due on July 2, 2024.
• 	Security Agreement (“Security Agreement”) to secure the Secured Note with the
specified collateral. The Security Agreement identifies the collateral that secures the
Secured Note and includes all after-acquired inventory and its proceeds. This collateral
was listed on Schedule 3 to the Security Agreement.
• 	Bridge Guaranty, whereby KMP and QAV guaranteed the Secured Note.
Id.
On July 1, 2024, TAG and AVS began discussions concerning an extension of the
Secured Note’s maturity date. See J-7. On July 22, 2024, the parties entered into a Forbearance
Agreement whereby the Debtor would pay $2,839,314.64 on August 22, 2024, plus $100,000 in
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interest, forbearance fees, legal fees and expenses. See J-8. TAG failed to perform its obligations
under the Forbearance Agreement and an Event of Default was declared under the Secured Note.
See J-9.
On September 6, 2024, AVS issued a Notification of Disposition of Collateral
("First Notification"). The First Notification described the Collateral as follows:
The Purchased Assets (as defined in that certain Asset Purchase Agreement,
dated as of January 2, 2024, between Debtor and Secured Party all Goods,
Inventory, Equipment and Fixtures; all Proceeds of each of the foregoing; and
to the extent not otherwise included, substitutions, replacements, accessions,
products and other Proceeds (including, without limitation, insurance proceeds,
licenses, royalties, income, payments, claims, damages and proceeds of suit) of
any or all of the foregoing.
J-10. At that point, no auctioneer had been retained. The Purchased Assets, as defined in the
APA, included some 80,000 pieces of equipment or “gear” that were identified on a list posted in
the data room relating to the proposed Sale. See J-1 (this collateral was listed on Schedule 3 to
the Security Agreement and was previously defined as the “Collateral”).
The First Notification, which was apparently not sent to the secured creditors, scheduled
the sale of the Collateral to the highest bidder at an auction to be held at the offices of Paul
Hastings, AVS’s law firm, on October 16, 2024. On October 9, 2024, AVS issued a Notification
of Postponed Disposition of Collateral ("Second Notification"). The Second Notification
contained the same description of the Collateral as in the First Notification. The Second
Notification moved the date of the Auction to November 12, 2024. The Second Notification was
also sent to creditors who held secured positions in the Collateral. See J-17. No payoff
information was provided regarding the third party secured debt.
TAG did not cooperate with AVS’s repeated efforts to exercise its contractual rights to
obtain information to prepare for the auction process or obtain access to the Collateral. See
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Transcript of March 12 hearing4 (“T3”) at 100:10–11 (“Q. Was TAG cooperating in the auction
sale? A. (Monroe) No, they were not cooperating.”). The Debtor refused all of AVS’s requests for
an updated, detailed list of all Collateral and liens against it and requests to provide access to the
Collateral. That access was obviously important to bidders for multiple reasons, including the
Collateral’s status, its existence and the ability to retrieve it. Additionally, at trial, AVS’s counsel
agreed with Debtor’s counsel that the updated Collateral list and the liens against it would have
provided “vital information to have available to AVS as a secured creditor and to the public if
they’re going to bid.” See Transcript of March 11 hearing5 (“T2”) at 33:4–5.
TAG failed to respond to all of AVS’s requests for information or requests to allow access
to the Collateral prior to the Sale. See Transcript of March 9 Hearing6 (“T1”) at 108:14–112:1.
Specifically, on September 10, 2024, AVS’s counsel sent TAG a letter demanding information,
including: (i) an updated list of all Collateral; (ii) copies of assignments and documents
evidencing the security interest; (iii) an updated list of the location of all Collateral; and (iv) a
detailed list of all liens and encumbrances the Debtors had granted on the Collateral. See AVS-
13; see also T1 at 107:1–108:15. AVS sent additional letters on October 16, 2024, and November
5, 2024, reiterating these demands and also requesting that the Debtor grant AVS, the auctioneer,
and qualified bidders access to inspect the Collateral. See AVS-13, AVS-18, AVS-24. It is
undisputed that TAG failed to cooperate with or even respond to any of these requests.
Nonetheless, settlement negotiations continued between September and November 2024.
When negotiations between TAG and AVS broke down, AVS moved forward with its
plans to auction the Collateral. AVS retained Paul Hastings, an international law firm with
4 Dkt No. 26
5 Dkt No. 25
6 Dkt No. 24
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experience in UCC sales, and an experienced auctioneer, Joseph Finn Co., Inc. (“Finn”) to
conduct the Auction Sale. The Auction Sale was widely publicized via over 9,300 emails sent to
industry-specific recipients, banner advertisements on three major industry websites generating
more than 120,000 impressions, and a populated virtual data room. See Dkt. No. 39 at 7.
One of the terms of the Auction Sale was that all bidders (besides AVS) were required to
provide a 5% deposit which capped their bids at a maximum bid of 20 times the deposit. See J-
26. Only AVS was privy to the amount of the other bidders’ deposits prior to the start of the
auction. See J-30; J-31.
Over eighty parties expressed at least initial potential interest, with seventy-four
executing non-disclosure agreements, and five bidders providing deposits, including one bidder
(NEP/Bonnano) who deposited $200,000, enabling a maximum bid at the Sale of $4 million.
Bidding was to begin with $50,000 minimum increments. See J-32. Only two bidders other than
AVS engaged in bidding at the auction (NEP/Bonnano did not bid). The two other bidders in the
auction stopped bidding at their cap and the auctioneer never announced any ability to exceed the
caps. See J-32. The Sale culminated in a winning bid by AVS of $2,550,000, which was $50,000
over the next best capped bid. Of that amount, $1,376,321.83 was a credit bid by AVS.
V. CONCLUSIONS OF LAW
A. Directed Verdict on Partial Findings
Federal Rule of Bankruptcy Procedure 7052, which incorporates Federal Rule of Civil
Procedure 52, applies in nonjury trials and allows the court to enter judgment on a specific issue
within a case. Stempel v. Unum Life Insurance Co., 2026 WL 2241244, at *2 (N.D. Ill. Aug. 4,
2026). The Rule provides:
(c) Judgment on Partial Findings. If a party has been fully heard on an issue
during a nonjury trial and the court finds against the party on that issue, the
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court may enter judgment against the party on a claim or defense that, under
the controlling law, can be maintained or defeated only with a favorable finding
on that issue. The court may, however, decline to render any judgment until the
close of the evidence. A judgment on partial findings must be supported by findings
of fact and conclusions of law as required by Rule 52(a).
Fed. R. Civ. P. 52(c). The Rule's objective is to “conserve[ ] time and resources by making it
unnecessary for the court to hear evidence on additional facts when the result would not be
different even if those additional facts were established.” 9 James Wm. Moore et al., Moore's
Federal Practice, § 52.50 [2] (3d ed. 2010). As noted by the First Circuit Court of Appeals,
“[w]hen a party has finished presenting evidence [as to a particular issue] and that evidence is
deemed by the trier insufficient to sustain the party's position, the court need not waste time, but,
rather, may call a halt to the proceedings and enter judgment accordingly.” Feliciano v. Rullan,
378 F.3d 42, 59 (1st Cir. 2004).
Thus, a court may grant a Rule 52(c) motion made by either party or may grant judgment
sua sponte at any time during a bench trial, so long as the party against whom judgment is to be
rendered has been “fully heard” with respect to an issue essential to that party's case. EBC, Inc. v.
Clark Bldg. Sys., Inc., 618 F.3d 253, 272–73 (3d Cir. 2010). As a result, a court need not wait
until that party rests its case-in-chief to enter judgment pursuant to Rule 52(c). N.Y. Susquehanna
& W. Ry. Corp. v. Jackson, 500 F.3d 238, 246 n. 6 (3d Cir. 2007) (“[T]he Federal Rules of Civil
Procedure ... allow judgment after partial findings against a party that has been fully heard on the
relevant issue.”). Of course, the court may opt to reserve judgment until all the evidence is in or
until the close of the non-movant's case-in-chief. Int'l Union of Operating Eng'rs, Local Union
103 v. Ind. Constr. Corp., 13 F.3d 253, 257 (7th Cir. 1994) (“[I]t is within the trial court's sound
discretion to decline rendering judgment until hearing all of the evidence.”).
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In considering whether to grant judgment under Rule 52(c), the court applies the same
standard of proof and weighs the evidence as it would at the conclusion of trial. EBC,618 F.3d at
272–73 (3d Cir. 2010); Pinkston v. Madry, 440 F.3d 879, 890 (7th Cir. 2006) (When ruling on a
Rule 52(c) motion, a trial court acts as “a finder of fact, weighing evidence and assessing the
credibility of the witnesses.”). Accordingly, “the court does not view the evidence through a
particular lens or draw inferences favorable to either party.” 7 EBC, 618 F.3d at 272; see also
Ritchie v. United States, 451 F.3d 1019, 1023 (9th Cir. 2006).
In this matter, although TAG filed its Rule 52(c) motion prior to AVS concluding its
presentation of evidence on the commercial reasonableness issue, AVS confirmed during oral
argument on the Motion that it has now rested its case. In response to the Court’s repeated
inquiries at oral argument, AVS was unable to specify additional facts that might be necessary for
the Court to make its determination regarding commercial reasonableness. Accordingly, the
Court finds that this matter is ripe for determination under Rule 52(c).
B. Commercial Reasonableness Standard
The parties do not dispute that the disposition of the Collateral pursuant to the Sale was
governed by Article 9 of the Uniform Commercial Code (“UCC”). Further, the parties do not
dispute that the applicable sections of the UCC as adopted by New York and New Jersey are
substantially identical so there is no choice of law issue. In this Opinion, the Court will use the
7 At oral argument on the Motion, counsel for TAG stated that on a Rule 52(c) motion this Court
must make all favorable inferences in support of the non-moving party. That is not, however, the
law in the Third Circuit or in general as to non-jury trials (although that is true for a motion for a
judgment as a matter of law in a jury trial). Under Rule 50(a), if a motion is made before
submission of the matter to the jury the judge must view all evidence and draw all reasonable
inferences in the light most favorable to the non-moving party. In re Michaels, 2026 WL
1018575, at *8 (B.A.P 10th Cir. Apr. 15, 2026).
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New Jersey version of the UCC. New Jersey statute 12A:9-610 governs the disposition of
collateral after a default and provides:
(a) Disposition after default. After default, a secured party may sell, lease,
license, or otherwise dispose of any or all of the collateral in its present
condition or following any commercially reasonable preparation or processing.
(b) Commercially reasonable disposition. Every aspect of a disposition of collateral,
including the method, manner, time, place, and other terms, must be commercially
reasonable. If commercially reasonable, a secured party may dispose of collateral by
public or private proceedings, by one or more contracts, as a unit or in parcels, and
at any time and place and on any terms.
N.J.S.A. § 12A:9-610 (emphasis supplied). As was acknowledged by the parties, the secured
party bears the burden of proving the reasonableness of any disposition by considering the
“totality of the circumstances.” N.J.S.A. § 9:627(a); Caterpillar Fin. Servs. Corp. v. Wells, 278
N.J. Super. 481, 511 (Law. Div. 1994). Accordingly, in Security Savings Bank v. Tranchitella,
249 N.J. Super. 234 (App. Div. 1991), the Appellate Division considered the “totality of the
circumstances” in analyzing the commercial reasonableness issue, including “the specific nature
of the collateral, depreciated value, special markets, the amount and type of advertising done, the
length of time which elapsed between repossession and resale, necessity for appraisal, public
versus private sale, notice, price and normal commercial practices employed by the trade.” Id. at
239-40; see also In CCO Condo Portfolio (AZ) Junior Mezzanine, LLC v. Feldman, 717 F. Supp.
3d 331, 336 (S.D.N.Y. 2024) (“The commercial reasonableness test analyzes the totality of the
circumstances, including the good faith efforts of the creditor.”) (cleaned up).
As to the “price” factor, the Court notes that while a price less than the value of the
collateral being sold is not determinative of the commercial reasonableness issue, it certainly is a
factor the Court can and should consider. Tranchitella, 249 N.J. Super. at 243. There, the court
found that the secured party has “the obligation to make a good faith effort to obtain the highest
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possible price for the [item].” Id. Further, a “substantial difference between the price received
and the [item’s] fair market value is relevant in deciding whether the sale was commercially
reasonable.” Dkt. No. 32-2, Ex. A (Model Jury Charge 4.44 at 4 citing Mercantile Financial
Corp. v. Miller, 292 F. Supp. 797 (E.D. Pa. 1968)).
Additionally, New Jersey statute 12A:9-609 outlines a secured party's right to take
possession after default and provides:
(a) Possession; rendering equipment unusable; disposition on debtor's premises. After
default, a secured party:
(1) may take possession of the collateral; and
(2) without removal, may render equipment unusable and dispose of collateral on a
debtor's premises under 12A:9-610.
(b) Judicial and nonjudicial process. A secured party may proceed under subsection (a):
(1) pursuant to judicial process; or
(2) without judicial process, if it proceeds without breach of the peace.
(c) Assembly of collateral. If so agreed, and in any event after default, a secured party
may require the debtor to assemble the collateral and make it available to the secured
party at a place to be designated by the secured party which is reasonably convenient to
both parties.
N.J.S.A. § 12A:9-609 (emphasis supplied).
C. Whether the Sale Was Commercially Reasonable
The Court agrees with AVS that the legal standard applicable to Article 9 sales is
commercial reasonableness and not commercial perfection. The Sale at issue here was not
perfect, but the question for the Court is whether AVS nonetheless sustained its burden of
establishing that it was commercially reasonable as that concept is applied in the UCC. To make
that determination, the Court will examine each aspect of the Sale, as well as the totality of the
circumstances.
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1) Timing
AVS provided over 70 days of advance notice to TAG which far exceeds the ten-day
minimum required by section 12A:9-612. This was reasonable.
2) Marketing
The marketing undertaken by AVS’s auctioneer was extensive and correctly targeted and
was more than satisfactory in the circumstances.
3) Notice
The New Jersey Appellate Division has held that a notice of a UCC sale must
“sufficiently describe the collateral to be sold so as to allow potential bidders the opportunity to
make an informed decision.” Tranchitella, 249 N.J. Super. at 241. In this case, the notices sent to
potential bidders did not sufficiently describe the Collateral, and it could not, because AVS and
its auctioneer were denied access to the Collateral and were not provided with an updated
Collateral list. The Collateral list that was placed in the data room 8 – which was the only list
available to potentially interested parties – was dated December 28, 2023, almost a year before
the Auction. It is undisputed that this list was materially inaccurate and incomplete. See Dkt. No.
39 at 10; Transcript of July 7 hearing9 (“T9”) at 35:25-36:2. The Court agrees that the Collateral
list that was provided to potential bidders in the data room was outdated, inaccurate, and
incomplete.
The stale Collateral list was acutely problematic in this case for several reasons. First,
TAG is (and was then) operating a business in which equipment is constantly being taken in and
out of the warehouse and at any given moment could be out on a job site. Also, because the
8 J-1
9 Dkt. No. 41
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equipment was in regular use, it was subject to wear and tear. Therefore, the stale list could not
account for items that were out in the field, were no longer working (or were otherwise in
disrepair), or had been replaced. Additionally, of the approximately 80,000 pieces of equipment
on the list some had no description or value assigned and others had limited or unintelligible
descriptions. Thus, parties were unable to determine exactly what equipment they were bidding
on, what any assigned values meant, the equipment’s condition, or even its existence.
In the Tranchitella case, the Appellate Division found that the description of the subject
collateral as a “1986 Chevrolet Truck” was insufficient as that description could describe
“anything from a small pick-up truck to a tractor-trailer.” 249 N.J. Super. at 242. Here, the
description of the Collateral was at least as insufficient and inadequate. For example, one of the
items of Collateral on the list was simply described as “Tuck’s workbox.” 10 Such insufficient
notice and description, in this Court’s view, contributed materially to the commercial
unreasonableness of the Auction Sale.
4) Price
Three bidders engaged in bidding at the Sale which culminated in AVS making the
winning bid of $2,550,000. Although a determination of a precise value for the Collateral is not
directly before the Court on this Motion, and the Court is not making any final determination as
to value, the evidence in the record strongly suggests that the price obtained at the Sale was
inadequate, as it was significantly below the Collateral’s fair market value (as determined by
AVS’s expert) and even the values assigned to it by AVS’s principal, Mr. Viera. Under the
Secured Note, TAG and AVS stipulated that the original purchase price of the Collateral was over
10 At trial, Viera Jr. explained: “That was a personal guy’s workbox. That was an employee. We
called him Tuck. And he just had a workbox with personal effects in it.” T9 at 49:12-15.
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$19.6 million. See J-1; J-3. But that valuation was perhaps made for other purposes and is not
being given any weight by the Court here. However, both AVS and its own valuation expert
testified that the Collateral’s fair market value was more than $9 million. See T8 at 23:23–24:7.
Even at the “auction depreciation value” that was “made up” by AVS’s expert, the value was
more than $4 million – or about $2 million more than the winning bid. See Transcript of March
13 hearing11 (“T4”) at 56:15-21.
Perhaps most significantly, one of AVS’s owners, Viera Jr., testified that the Collateral
was worth many millions more than the winning bid. The following testimony was elicited on
cross-examination:
Trenk: So you testified during the last hearing quite clearly that your estimate of the value
of the gear that you were supposedly the winning bidder on November 19, 2024, was
approximately $10 million. Do you remember that testimony?
Viera, Jr.: Sure.
Trenk: Okay. Again, when you use the word sure, you're answering --
Viera, Jr.: Yes.
Transcript of June 22 hearing12 (“T8”) at 23:23 -24:5. Additionally, shortly after the Sale, AVS
offered to sell the Collateral back to TAG for approximately $7 million. See T3 at 57:2-59:23.
The Court also agrees with AVS’s contention that “it is improper to reason backwards
from price alone to determine the commercial reasonableness of the overall sale process.”
Hicklin v. Onyx Acceptance Corp., 970 A.2d 244, 251 (Del. 2009). But that is not the same as
saying that price is irrelevant. An exceptionally low price can be probative of the reasonableness
of the auction process. Mercantile Fin. Corp. v. Miller, 292 F. Supp. 797, 801 (E.D. Pa. 1968) (a
11 Dkt. No. 27
12 Dkt No. 40
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price “discrepancy, if substantial, is relevant to a determination of whether a challenged sale was
‘commercially reasonable’”). The price discrepancy was substantial here.
In Tranchitella, a truck purchased for $21,600 was repossessed and sold by the secured
creditor about a year later through a private sale for $14,500. 249 N.J. Super. at 236-237. Even
though the secured creditor provided some evidence that the truck was worth only $10,000, the
court found that the secured creditor failed to use commercially reasonable, good-faith efforts to
obtain “the highest possible price for the truck, specifically considering the price as a factor.” Id.
at 243. Here, the price obtained at the Auction Sale was anywhere from approximately $2 million
to $7 million less than the value placed on the Collateral by ANS’s principal and its expert. 13
While not dispositive, that differential is further evidence of the commercial unreasonableness of
the Auction Sale.
At oral argument, AVS’s counsel argued that if a low price was obtained at the Sale that
was not a problem because the only party potentially hurt was TAG and that this Court should
not take a “bankruptcy view” and consider the interests of all parties. 14 The Court disagrees
because the UCC itself imposes a duty to act in good faith. See N.J.S.A. § 12A:1-304 (“Every
contract or duty within the Uniform Commercial Code imposes an obligation of good faith in its
performance and enforcement.”). New Jersey courts have interpreted that duty to mean that in a
13 The smaller difference of about $2 million is based on the “auction depreciation value” that
was “made up” by AVS’s expert and is not being adopted by this Court.
14 Similarly, in its opposition brief AVS stated: “Where the Debtor is the only party who suffers
from the circumstances it created, it should not be heard to throw those alleged deficiencies at
the feet of the defendant.” AVS brief at 3. While TAG may be the blameworthy party as to lack of
cooperation, TAG’s noncooperation does not alter this Court’s obligation to determine if a
commercially reasonable disposition of Collateral occurred here based on the totality of the
circumstances. Those circumstances include, among other things, TAG’s lack of cooperation and
AVS’s failure to avail itself of available judicial remedies when the non-cooperation became
apparent.
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UCC sale, a secured party “has a good faith obligation to secure the highest net benefit for the
debtor.” Tranchitella, 249 N.J. Super. at 242, n. 2 (emphasis supplied). In other words, the
secured party has “the obligation to make a good faith effort to obtain the highest possible price
for the item” for the benefit of other parties, including the debtor. Id. at 243. 15 Thus, the interests
of the Debtor and other parties are to be considered by this Court in determining commercial
reasonableness.
In this case, the Auction Sale did not secure the highest net benefit for the Debtor (or
other interested parties), nor did it satisfy AVS’s obligation to obtain the highest possible price
for the Collateral.
D. Totality of the Circumstances
As previously established, both New Jersey and New York courts look at the totality of
the circumstances in evaluating commercial reasonableness. Tranchitella, 249 N.J. Super. 239-
40; In CCO Condo, 717 F. Supp. 3d at 336. AVS maintains that it has “affirmatively established
by a preponderance of the evidence that the November 19, 2024 UCC Sale was commercially
reasonable and generated reasonably equivalent value under the circumstances.” AVS brief at 3
(emphasis supplied). 16 What has not been affirmatively established is that “under the
circumstances” and the “totality of the circumstances” are co-extensive. This distinction is not
academic. It is vitally important in this case because even AVS’s auction expert, Mr. Ronald
Caspert, rendered his conclusion that the Sale was commercially reasonable with the caveat
“under the circumstances.” T5 at 184:4-8 (“Q: Under the circumstances of this particular auction
that were present, that we’ve talked about ad nauseum today, did Ross Finn run a commercially
15 These duties of a secured party to a debtor (and others) also directly conflict with AVS’s
argument that any such duty was abrogated by the Debtor’s failure to cooperate.
16 Dkt. No. 39
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reasonable auction, in your opinion? A: Yes, he did.”); T5 at 180:17-22 (Q: I think a reasonable
inference is that you run commercially reasonable auctions. Is your understanding that under --
the circumstances adapt to – commercial reasonableness adapts to the circumstances of the
auction? … A: Correct.”).
The “circumstances” being relied upon by AVS are the deficiencies with the Auction Sale
that were caused or materially exacerbated by TAG’s own alleged misconduct. The Court uses
the word “alleged” here because the parties vigorously dispute whether TAG had a duty to
assemble the Collateral for the Sale and allow access for inspection and other purposes. The
Court finds that no provision of the Security Agreement required TAG to assemble or provide
access to the Collateral, although providing access was at least arguably TAG’s duty under the
UCC after it defaulted. See N.J.S.A. § 12A:9-609(c). Also, the Security Agreement did require
TAG to provide an updated lien list and other updated information, which TAG did not do.
However, these failures are largely academic as there is no dispute that TAG did not provide any
access or information whether or not it was required by the Security Agreement or the UCC. The
question for this Court to decide is whether the Sale was commercially reasonable in light of that
non-cooperation. For the reasons previously stated and those that follow, the Court answers the
question in the negative.
AVS’s understanding of “under the circumstances” appears to be that when a debtor
creates obstacles to a UCC sale a creditor is justified in conducting an objectively unreasonable
sale. This understanding was essentially confirmed by AVS’s own expert when he testified that
he had never conducted an auction sale like this one, that the lack of information and access
materially and adversely affected the entire process, including the price obtained, and that
bidding at the Auction Sale was “like buying a pig in a poke.” The UCC contains no “difficult
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debtor” exception to the commercial reasonableness standard. The Court is not willing to read
such a significant exception into the statute without any legislative or caselaw support. AVS has
cited no authority to support its position that commercially unreasonable sales are permissible
under the UCC if a debtor is noncooperative. As noted by TAG, the UCC (and the law generally)
provides a secured party with the ability to seek judicial remedies if a debtor is uncooperative. In
this regard, the UCC expressly provides that the secured party may seek appropriate relief
through “judicial process.” N.J.S.A. § 12A:9-609(b).
In this case, although AVS appears to have at least considered that option, it chose instead
to proceed with a Sale that was littered with the material deficiencies noted in this Opinion. If
AVS had gone to court, it could have asked for and likely secured access to the Collateral and the
information it was requesting. It also could have asked a court to conduct a judicially authorized
and/or supervised sale that would likely have provided it with the BFP protection it seeks in this
case. 17 See N.J.S.A. § 12A:9-627(c)(1) (a disposition of collateral “is commercially reasonable if
it has been approved [ ] in a judicial proceeding”); and BFP v. Resolution Trust Corporation, 511
U.S. 531, 545 (1994) (consideration received in a non-collusive, regularly conducted non-
judicial foreclosure sale constitutes reasonably equivalent value). Instead, it chose not to do so
and proceeded with the Sale. In the Court’s view, that failure to seek judicial relief, particularly
in these circumstances, was itself commercially unreasonable.
The phrase “commercially reasonable” is peppered throughout the UCC but nowhere in
the UCC does it indicate that it is a subjective “under the circumstances” test. Although neither
the parties’ nor the Court’s own research disclosed a case that directly addresses that issue in
17 AVS moved to dismiss TAG’s complaint on various grounds, including AVS’s asserted
compliance with the BFP standard. [Dkt. No. 8]. That motion was denied by this Court. [Dkt.
No. 14]. AVS also cited to BFP extensively in its post-trial briefing. [Dkt. No. 39 at 37-40].
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relation to section 9-610(b), there are some that interpret the phrase in other parts of the UCC. In
a case addressing the question of who should bear the risk of loss due to a fraudulent wire
transfer, the bank defended by arguing that its actions were commercially reasonable. The
District Court held that: “As set out in the UCC as adopted by Mississippi, the determination of
what is commercially reasonable is a question of law—which the Court believes imposes an
objective test of reasonableness.” Choice Escrow & Land Title, LLC v. BancorpSouth Bank, 2013
WL 1121339, at *6 (W.D. Mo. Mar. 18, 2013), aff'd, 754 F.3d 611 (8th Cir. 2014). This Court
agrees with that analysis, particularly in this case where sophisticated parties were represented by
experienced counsel; the non-cooperation was material and continuing; and the entire Sale
process was adversely affected as a result. AVS could and should have gone to court in these
circumstances.
Accordingly, the Court finds that considering the totality of the circumstances in
evaluating commercial reasonableness is not the same as creating a subjective “under the
circumstances” standard for commercial reasonableness. Such a subjective test would essentially
eliminate the commercial reasonableness standard whenever a debtor does not cooperate with an
involuntary sale of collateral and the Court so holds.
1) 	AVS’s Decision to Proceed with the Auction Sale
a. 	The Decision to Go Forward with the Sale Rather Than Litigate Was Not
Reasonable in the Circumstances.
As noted, at some point, AVS made the decision to go forward with the Sale even after it
was abundantly clear that TAG had no intention of cooperating with the Sale by giving an
updated Collateral list, giving the auctioneer and bidders access to inspect the Collateral, or
providing a list of payoff amounts for liens. Mr. Mignone made no secret of that, going as far as
announcing that “we are not offering him access to any gear nor will we be participating in an[y]
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commercially reasonable sale of the inventory.” See AVS-20. The auctioneer received many
inquiries from potentially interested parties as to how the Auction would proceed with this lack
of information or certainty and essentially told those parties that AVS had no control over TAG
and that potential bidders were on their own in retrieving any Collateral. Many of those inquiries
and the auctioneer’s responses are highlighted in TAG’s moving brief. 18
Despite these deficiencies, and even though AVS could not give any assurances that
bidders could retrieve any Collateral they successfully bid upon, AVS went ahead with what its
own expert testified was a “blind” auction in which the bidders had no ability to inspect the
Collateral. T2 at 10:23-24. AVS’s expert Mr. Ronald Caspert testified that the inability to inspect
the Collateral was “[t]he biggest impediment by far” and that it “affected the entire auction, the
entire process.” See T5 at 48:17-23, 170:12-25. Mr. Caspert further testified that the absence of
inspection access meant the equipment “would definitely bring so much less than its value.”
Id. (emphasis added). As noted, he also testified that buying items you could not inspect was like
“buying a pig in a poke” (T5 at 49:3) which is what made this Sale “wildly different” than the
thousands of other similar sales he had conducted. See T5 at 137:18-25. Mr. Finn, AVS’s
auctioneer, who had similarly participated in thousands of other sales of similar equipment, also
testified that these were circumstances he had never faced before. See Transcript of May 18
hearing19 (“T6”) at 197:24-198:23.
In another case involving the repossession and sale of a vehicle, the court stated that it
“interprets the phrase ‘every aspect of this disposition’ to include not just the sale of the
collateral but also the decision to repossess it.” First Fid. Acceptance v. Hutchins, 315 N.J.
18 Dkt. No. 32-1 at 10-13
19 Dkt. No. 34
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Super. 201, 204 (Law. Div. 1998). In that case, the court found that it was not commercially
reasonable to spend $1,655.33 repossessing and preparing for sale a car that is likely to sell for
only $500. That rationale is directly applicable here. AVS had the obligation to ensure that every
aspect of the disposition of the Collateral was reasonable, including the decision whether to
proceed with the Auction Sale rather than seek judicial intervention. While the UCC may not
require AVS to avail itself of the judicial intervention option, the decision to forego that
intervention still factors into whether the sale process as a whole can be considered commercially
reasonable. That decision is certainly an “aspect of a disposition of collateral” and every aspect
must be commercially reasonable. N.J.S.A. § 12A:9-609(b)(2). In this Court’s view, the fact that
of the 80 parties that initially expressed interest in the Sale, only 5 provided deposits and only 3
(including the secured creditor) actually bid, as well as the low price obtained, are all indicative
of the inherently and obviously problematic nature of going forward with a “blind” sale.
AVS’s counsel, Sean Monroe, was unable to satisfactorily explain why he and his team at
Paul Hastings made the decision to go forward with a “blind” auction as opposed to seeking, for
example, an order of replevin so that AVS and its auctioneer would have access to the Collateral
prior to the Sale. At best, his testimony was not elucidating about the decision-making process.
T3 at 87:13-24 (“the decision was made strategically”; T2 at 94:21 (“I don’t recall the details of
our legal analysis at that time”). At worst, it exhibited a lack of understanding that various types
of judicial process were available prior to a UCC sale. T2 at 91:11-94:12. Here, the Court notes
that AVS found it acceptable to place the burden on bidders to use judicial process to retrieve any
equipment but was unwilling to utilize judicial process itself. See, e.g., T2 at 10:23-24; 11:6-10
(quoting from J-28) (“[A]nybody who is a successful bidder and takes title to the inventory
equipment would then have the obligation of tracking it down and obtaining possession with
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whatever legal means you have available to you,” and “it's an unfortunate situation but it's the
best we can do.”). If AVS can require bidders to utilize legal process to obtain the equipment they
successfully bid upon, AVS can and should be required to utilize legal process in similar
circumstances.
b. 	AVS Should Have Utilized Judicial Process
As noted, section 12A:9-609(b)(1) permits a secured creditor to take possession of its
collateral after default “pursuant to judicial process.” AVS argues that it is not required to seek
judicial intervention. That is correct; nothing in the UCC requires a party to seek judicial
intervention before proceeding to a collateral sale. However, such a requirement would not need
to be stated because section 9-610 expressly requires that all aspects of a disposition of collateral
be commercially reasonable. When UCC sections 9-609 and 9-610 are read in tandem, it
becomes clear that a non-judicial sale is permitted only when it can be conducted in a
commercially reasonable manner and without breaching the peace. 20 The natural corollary to that
is that if a secured party cannot conduct a commercially reasonable sale without breaching the
peace, it will need to seek whatever judicial intervention necessary to conduct a commercially
reasonable sale. There is no doubt in this case that AVS could not take possession of the
Collateral or provide for its inspection or removal without breaching the peace. Therefore,
litigation was necessary and appropriate to conduct a commercially reasonable sale in these
circumstances.
AVS argues that by “requiring judicial intervention whenever a debtor deliberately
refuses to cooperate would abrogate entirely the express, non-judicial remedy available under
20 Section 9-609(b)(2) provides that after default a secured party may take possession of
collateral “without judicial process, if it proceeds without breach of the peace.” N.J.S.A. §
12A:9-609(b)(2).
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Article 9.” AVS brief at 25. That is simply not true. Many UCC sales are publicly and privately
conducted on a regular basis without any litigation at all, provided that the sale can be conducted
without breaching the peace and/or with a debtor’s cooperation (or non-involvement). On the flip
side, allowing an otherwise commercially unreasonable auction sale to be conducted simply
because the debtor does not cooperate would abrogate entirely the UCC’s requirement that every
aspect of a sale be commercially reasonable. More germanely, the UCC expressly contemplates
that “judicial process” may be necessary. It was here and AVS did not utilize it.
In sum, AVS had many legal options available to it that it chose to forego. Those options
included a summary proceeding for replevin, which AVS considered but did not pursue; an Order
to Show Cause seeking access and information; and/or a complaint to judicially foreclose on its
Collateral. As previously noted, had AVS sought judicial intervention to obtain the information
and access it needed, and/or asked the Court to supervise the Sale itself, AVS would likely have
been entitled to the BFP protection it sought from the beginning of this case. See N.J.S.A. §
12A:9-627(c)(1) (“A collection, enforcement, disposition, or acceptance is commercially
reasonable if it has been approved: (1) in a judicial proceeding.”). Its failure to do so here
contributed to the commercial unreasonableness of the Sale.
2) 	Bidding Procedures
a. 	Bidding cap
Another factor that the Court finds contributed to the commercial unreasonableness of the
Sale is the bidding procedure that capped bids at twenty times the 5% deposit tendered pre-
auction. The only party that knew the amounts of those deposits and caps (other than the
auctioneer) was AVS. The only two parties that bid other than AVS stopped at their pre-auction
caps. See J-32. AVS won the bidding at $2.55 million, $50,000 above the bidding cap for the next
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highest bidder. Id. And although AVS argues that the auctioneer could have amended the bidding
procedures to allow bids in excess of the cap, there is no evidence that happened. Id. Thus, AVS
knew its $2.55 million would top the last bidder who could go no higher. 21 The Court believes
this term could and actually did “chill” the bidding process and also provided AVS with an unfair
advantage, which also contributed to the commercial unreasonableness of the Sale.
b. 	Lack of lien information
AVS did not provide potential bidders with the amount of liens on the Collateral, nor did
it advise potential bidders that they were taking subject to those liens. If AVS had gone the
judicial route, it could have accessed that information and been assured that all interested parties
– lien holders and bidders alike – were properly and accurately notified. AVS cites Quest Sys.,
LLC v. Far, 2023 WL 1806213 (Fla. 2d DCA Feb. 8, 2023) for the proposition that a buyer at a
foreclosure sale has the burden to conduct its own due diligence to determine if there are any
senior liens. The Court does not find that case persuasive for several reasons. First, that case is
not binding on this Court. Second, and more importantly, it is readily distinguishable because
that case involved a judicial foreclosure rather than a UCC sale. In this case, no court was
involved in the Sale process and a different standard applies, i.e., every aspect of the sale must
be commercially reasonable. Also, in this Sale the potential bidders were left to their own
devices not only to determine the condition and existence of the Collateral, but also the amount
of any liens, whether the Sale was to be subject to liens or free and clear, or how they could
retrieve any Collateral they acquired. These are additional defects that cumulatively made the
Sale commercially unreasonable.
21 As noted, the potential bidder, NEP/Bonnano, who made a $200,000 deposit enabling a
maximum bid of $4 million, chose not to participate at the Auction Sale.
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c. 	Lot vs. Bulk
There was a significant amount of confusion over whether the Collateral was being
offered in lots and then in bulk or just in bulk, even though the Bidding Procedures expressly
stated that the Collateral would be offered in bulk, and then in lots. See J-26 at ¶ 7. There was no
confusion, however, as to: (i) whether it would be preferable to offer to sell this type of collateral
in lots – AVS’s own counsel,22 valuation expert, 23 and auctioneer 24 testified it would – and (ii)
whether it was offered in lots – it was not. See T5 at 49:4-50:10. This also contributed to the
unreasonableness of the Sale and could have been avoided with judicial intervention.
d. 	Access to Collateral for Removal
AVS’s auctioneer responded to questions from interested parties about access to the
Collateral post-auction by repeatedly saying that AVS does not control the Debtor so it had no
information about whether TAG or TAG’s landlord would permit a successful bidder to pick up
the equipment. See T2 at 10:9-15 (“[A]s we notified all the potential bidders, the equipment in
the inventory is still in the possession of the debtors here . . . and anybody bidding on the
collateral would have the obligation of securing possession of it. It's not something that we can
guarantee.”); T2 at 10:23-24; 11:6-10 (“[A]nybody who is a successful bidder and takes title to
the inventory equipment would then have the obligation of tracking it down and obtaining
possession with whatever legal means you have available to you”); T6 at 126:10-11 (Bidder
question No. 4: “How does the winner take possession of the property?” Finn response: “It will
be your responsibility to contact the debtor to arrange.”); T6 at 140:24–25 (same); T6 at 141:19
20 (same). Inarguably, the lack of assurance that a winning bidder can actually obtain the
22 See T2 at 62:15-23.
23 See T4 at 118:16-18.
24 See T6 at 112:11-23.
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equipment it successfully bid on may adversely impact bidding. The Court believes that is
exactly what happened here.
3) 	“As Is” Terms Do Not Make the Sale Commercially Reasonable
AVS takes the position that it was acceptable for it to proceed with a “blind” auction
simply because it informed potential bidders that it had no control over TAG and that therefore
the sale was “as is” and AVS could make no guarantees as to the existence, condition or location
of the Collateral, or as to its removal. See, e.g., Transcript of June 8 hearing25 (“T7”) at 113:12-
16 (restating Finn’s statement at the November 19 auction: “I would like to make it clear to
everybody in attendance that the secured party does not control the debtor, that we do not have a
current inventory list and that we can't guarantee that the successful bidder here today will have
access to retrieve the equipment.”); T2 at 106: 9-12 (“again, we have no further information to
provide and we do not control the debtor. The bidder can contact the debtors, as we have
provided contact information in terms of sale and the VD.”); T1 at 183:11-22 (same); see also J-
28 (November 13, 2024 Auction Transcript) at 4:9-5:3. AVS washing its hands of providing vital
information about the Sale is not the legal equivalent of conducting a commercially reasonable
sale.
Finally, even if a “blind” sale may be an acceptable standard in some industries (AVS’s
counsel suggested that storage facilities might be an example), 26 AVS presented no evidence that
a blind sale is standard in the audio-visual equipment industry. In fact, the opposite was
established. Both its auction expert, Mr. Caspert, and its auctioneer, Mr. Finn, testified that in
25 Dkt No. 33
26 Transcript of August 4 hearing at 105:4-23 [Dkt. No. 45]
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their many decades of experience, including literally thousands of sales of similar equipment,
they had never conducted a similar auction. See T5 at 57:1-5; T6 at 71:15-20.
E. TAG is Not Prevented from Challenging the Sale Based On Its Failure to
Cooperate
AVS asserts that TAG should be equitably estopped or, alternatively, prevented by the
unclean hands doctrine from challenging the Sale based on conditions it created. AVS maintains
that at every step TAG impeded AVS’s effort to obtain the information necessary to market the
Collateral more comprehensively so it cannot now invoke the lack of information to argue that
the Sale process was not commercially reasonable. As noted, the record in this case indisputably
establishes TAG’s non-cooperation with the Sale. However, none of the cases AVS relies upon
for its equitable estoppel and unclean hands arguments arose in the context of a UCC sale.
Perhaps that it because the UCC itself provides a remedy in such circumstances – seek judicial
intervention. See N.J.S.A. § 12A:9-609(b)(1). The Court declines the invitation to apply these
equitable doctrines to allow AVS to sidestep its duty under Article 9 to ensure its disposition of
Collateral is commercially reasonable in all aspects. Drobnak v. Andersen Corp., 561 F.3d 778,
787 (8th Cir. 2009) (“Equitable remedies are available only when no adequate legal remedy
exists.”). This determination does not, however, mean that the Court will not consider TAG’s
conduct when evaluating available remedies or damages, including (without limitation) whether
and how much interest and attorney fees AVS may be entitled to recover.
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Conclusion
The Court finds that the Sale was not commercially reasonable and is therefore void, of
no force or effect, and did not transfer title to the Collateral to AVS. TAG is granted a directed
verdict on that issue. The Court will enter an Order in accordance with this Opinion.
DATED: October 15, 2026 	_____________________________
Honorable Vincent F. Papalia
United States Bankruptcy Judge
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