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Toys.com Back On Auction; May Sell for Over $1.25M

Toys.com will be auctioned again; Faculty Lounge will be stalking horse bidder.

Domain Name Wire has learned that the sale of Toys.com has been halted by the bankruptcy court and the domain name will be auctioned again. Faculty Lounge, the company that won the domain name at auction earlier this month, will be a stalking horse bidder in the auction.

Eli Columbus, a shareholder in Winstead PC’s Business Restructuring/Bankruptcy Practice Group (which is not involved in the case), explained that a stalking horse bidder typically sets the floor in an auction, and typically receives additional rights in return.

“You have a bidder committed to buying an asset at a certain price,” said Columbus. “They’re setting the bar. The benefit to the bankruptcy estate is you know you have a buyer at a certain price, and it generates some interest.”

If Faculty Lounge doesn’t win the domain name in the new auction, it will likely receive some sort of compensation. “From the stalking horse bidder perspective, there are typically some incentives in the auction procedures,” said Columbus. “A lot of times the court will approve a break up fee if they aren’t the successful bidder. This usually covers at least the stalking horse bidder’s fees. In some cases the break up fee will be a percentage of the sale price.”

Bankruptcy courts sometimes block asset auction sales if they believe the assets weren’t marketed in a way that achieved the highest results. As I wrote in an article yesterday about DONE! Ventures’ purchase, I’m not surprised that there has been a challenge to the Toys.com sale. Few companies knew about the eToys auction, and the prices on some of the domain names were well below market prices.

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  1. RegFeeNames.com says

    Yes this name should have sold for approx $3-5mil in my eyes but it is very tough out there in getting cash to buy a domain.

    Even large companies shall struggle but I see someone like Walmart etc going after this if they market it correctly to them.

    Regards,

    Robbie

  2. wannadevelop.com says

    This name isn’t worth millions in today’s down market.

    Amazon.com was in the auction.

    Reinvent.com and Oversee.net were as well.

    The market sets the price… and it did.

    If anybody could make it work as a standalone business it would be Amazon which happens to be a billion dollar company.

    I’m telling you, whoever the new owner will be — it still won’t be any of the giants or end users.

    It will be a company from the domain space and the toys.com domain will be setup with a nice and boring parked page 😉

    Moving on…

  3. Andrew Allemann says

    @ WannaDevelop – if more than one company is willing to pay $1M, which is the case here, then it’s worth more than $1M.

    It’s true that Amazon was there and didn’t pick up anything. Oversee.net “bought in” but didn’t show up.

    It won’t be an end user, it will be a domain investor.

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