Orderly liquidation appraisal

Definition

A valuation of used equipment at what it would fetch in an unhurried sale.

Why It Matters

It is the difference between a lender counting half your equipment and counting eighty percent of it, which on a fleet or a shop full of machines can be the difference between fully secured and a shortfall. Without one the program values used equipment at half of net book value; with one it may go to eighty percent. The guaranty does not cover a shortfall, since SOP 50 10 8.1 says it is no substitute for available collateral, so the gap is made up with liens on the larger owners' personal real estate. So it is worth commissioning before the file goes up instead of after a collateral gap appears, and the cost of the appraisal is small against the equity it can save.

In numbers: A fleet carried at $800k of net book value counts as $400k of collateral unappraised. With an orderly liquidation appraisal that also comes in at $800k it counts up to $640k, which is $240k less of a shortfall to secure with liens on the owners' personal real estate.