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Abandoned Hardware
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Abandoned Hardware

randvegetarandvegeta Member, Host Rep
edited August 2021 in General

So.. we have our own DC and many of our customers do colocation with us. Well.. not many... but some.

How long after the equipment is abandoned (i.e. they stop paying and stop responding to communications) would be reasonable before the DC can 'claim' it as their own.

Usually people abandon hardware because it is worth less than the amount owed.

However in this case, the hardware is probably worth 2-3x more than the amount owed. That's based on 2nd hand market rates. Storage in HK however is expensive. The customer has gone BK some months ago and their company was in the process of shutting down. They left a few K of unpaid bills but agreed to pay for storage (at 1/10 the regular colo rate). The idea was that they were going to find a buyer for the equipment and pay off the debt. However they stopped paying for storage some months ago, and they appear to have actually been shut down now. The company email addresses no longer exist.

I was thinking about 'claiming' the hardware in stages. So if the value is 3x the amount due, I'll 'claim' 1/3 of it first. Then as time goes on, accounting for the storage, claim more and more until there is nothing left to claim.

Does that seem... reasonable?

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Comments

  • aiden1aiden1 Member
    edited August 2021

    Every place I have coloed has something for this.

    Upon termination of this Agreement for any reason, Customer must, at its own expense, immediately vacate and surrender the Customer Space and remove all Customer Equipment from the Customer Space and the Data Center. If Customer fails to remove such Customer Equipment within 30 days of the effective date of termination, then ColoHouse may charge Customer a storage fee for such Customer Equipment in amount equal to 50 percent of the monthly recurring charge (excluding the monthly recurring charge for usage based Services) as of the effective date of termination of this Agreement until the time Customer either (i) removes the Customer Equipment from the Customer Space or (ii) it is deemed abandoned by Customer. Customer Equipment is deemed abandoned if Customer does not remove the Customer Equipment within six months of the effective date of termination of this Agreement.

    Customer will remove the Equipment from the Space and the Facility and will fully repair any damage to the Facility caused by Customer, including, without limitation, any damage resulting from Customer’s removal of the Equipment from the Space. Any Equipment and/or personal property of Customer not removed within 30 days following the date of expiration or termination of the applicable Service Order will, at XXXHost’s option, conclusively be deemed to have been abandoned by Customer. XXXHost may, upon written notice to Customer, apportion, sell, use, store, destroy, or otherwise dispose of the Equipment or Customer’s personal property without liability to Customer or any other person or entity. Customer will pay all expenses and costs incurred in connection with XXXHost's disposition of the Equipment and Customer’s personal property, including, without limitation, the cost of restoring the Facility to its original condition and of removing the Equipment or Customer’s personal property from the Facility.

    Following termination, the space used on the Equipment for the Services (or, if applicable, the Equipment itself), IP space and Back-Up Services (if any), are recycled. It is your obligation to ensure that you arrange to complete the transfer of anything you need from the Services and/or Equipment on the Termination day prior to 12:00 am in the time zone of the particular data center in which the Services are provided.

    Thanked by 2mrTom Daniel15
  • so much trouble to be fair to non pay costomer? just sell off maybe keep disk/data as goodwill for sometime , or not.

  • randvegetarandvegeta Member, Host Rep

    What's with the grim reaper avatar?

    Thanked by 1Ympker
  • hostdarehostdare Member, Patron Provider
    edited August 2021

    @randvegeta said: What's with the grim reaper avatar?

    You missed the nigh sect join thread

  • Halloween is coming.

  • DPDP Administrator, The Domain Guy

    Claim them all before Black Friday.

    Then you know what to do :D

  • @DP said: Then you know what to do :D

    Their loss is our low end gain.

  • aquaaqua Member, Patron Provider
    edited August 2021

    Cut power and internet after ~3 days the unpaid invoice, and I would do 15-30 days for them to either pay the invoice + a late fee, if not then you will “claim hardware to cover costs”, you can sell it or keep it and you got yourself a new server. I will say, I have never had to this (thank god), but as a gesture either remove drives and let them purchase it off of you or completely wipe all data and refrain from accessing it.

    Also do speak with the client and see if they’re in some sort of financial crisis or something that is holding them back from paying the invoice. I tend to be pretty fair to clients if they have dedicated servers, ex. giving them some extra time or working out a payment plan (paying on specific dates).

  • DPDP Administrator, The Domain Guy

    @aiden1 said: Their loss is our low end gain.

    One man's trash is another man's treasure.

    The lowenders here must be kept well-fed.

    Thanked by 1AndrewL64
  • @aqua said: Also do speak with the client and see if they’re in some sort of financial crisis or something that is holding them back from paying the invoice. I tend to be pretty fair to clients if they have dedicated servers, ex. giving them some extra time or working out a payment plan (paying on specific dates).

    Considering they've already filed for bankruptcy months ago,

  • aquaaqua Member, Patron Provider

    @aiden1 said:

    @aqua said: Also do speak with the client and see if they’re in some sort of financial crisis or something that is holding them back from paying the invoice. I tend to be pretty fair to clients if they have dedicated servers, ex. giving them some extra time or working out a payment plan (paying on specific dates).

    Considering they've already filed for bankruptcy months ago,

    I was speaking in general, be open and talk with the clients. Seeing that the company doesn’t exist anymore, it seems like they’ve just sucked it up and left the hardware to them.

  • I guess this hardly depends on the laws which apply in your country ?

    I have a similar situation as I rented out storage space and the old contracts don't have any section making it clear what happens to tenants stuff when they're not paying their rents.

    Here in Germany I would say thats highly problematic as you cannot sell stuff which is not really yours but law in germany is problematic anyways :smiley:

    I would suggest to put a new section in your colo contracts which make it clear how you handle such a process. You also have to keep in mind, that you are somehow responsible for the sensitive data on the disks and drives.

  • @randvegeta said:
    What's with the grim reaper avatar?

    You should join the Nigh sect.

  • If they are bankrupt the hardware could be part of the insolvency estate.

  • AllHost_RepAllHost_Rep Member, Patron Provider

    FWIW for further reading this comes under a "lien" in the UK.
    The general timeline is keep for 3 months, if not paid then sell to recover costs but afaik you can specify the time terms in the contract / terms of service. I know one provider that makes a claim over unpaid hardware in just 14 days.

    Thanked by 1LordSpock
  • @AllHost_Ben said: I know one provider that makes a claim over unpaid hardware in just 14 days.

    Yeah but you'd have to do it in the first place :smiley:

  • My understanding is that if the company has filed for bankruptcy then administrators will be appointed. The equipment becomes part of the bankruptcy proceedings i.e. it is a company asset. It is then up to the administrators to sell the equipment and any other assets to recover any money which is then paid to the creditors. For the outstanding debt, you would join the list of creditors to be paid.

  • ApeWebApeWeb Member, Host Rep
    edited August 2021

    @LeonDynamic said:
    Join the list of creditors to be paid.

    My experience is that most administrators take a massive fee and barely ever pay the creditors (dependant on size of bankrupt company though) you would be better off repossessing the servers than joining the list of creditors imo.

    Also dependant on the value of the equipment many administrators may not bother trying to sell it off and just write it of as a loss.

    Thanked by 1TimboJones
  • ClouviderClouvider Member, Patron Provider

    The key is as always - what’s in the contract ?

  • skorupionskorupion Member, Host Rep

    as soon as the value of the hardware is lower than amount owned

  • LordSpockLordSpock Member, Host Rep

    Do you know if the company has been struck off - or is it still going through insolvency proceedings?

  • randvegetarandvegeta Member, Host Rep

    @LordSpock said:
    Do you know if the company has been struck off - or is it still going through insolvency proceedings?

    No idea. The company is not HK registered. I just know they are unreachable and have not paid the 1/10 price for storage for several months.

    @Clouvider said: The key is as always - what’s in the contract ?

    That they are contractually obliged to pay many times the value of the equipment. However, since covid, we've had a lot of our business clients suffer. Rather than enforce the contract, we let everyone who want to, just cancel or downgrade. In this customer's case, cancel all bandwidth commitments, and just pay 1/10 the regular colo fees to cover storage. This was a 'verbal' agreement. Going by the contract, they are now very very far behind. Far beyond what I could recover from the equipment. But I'm not a dick and I don't like squeezing people who are struggling. That's a very UK thing to do though.

    I want to do right by the customer. I don't want to take advantage, but at the same time.. we can't store the crap forever. It will cost a fair bit of labour just remove the equipment from the rack. All of it needs to be paid for... I'm thinking now is the time to take it down and claim it as our own. The last time we had payment or contact from them was around 3 months now.

    Thanked by 1JustPfff
  • Might be worth a shot to give them a call.

  • LordSpockLordSpock Member, Host Rep

    @randvegeta said:

    @LordSpock said:
    Do you know if the company has been struck off - or is it still going through insolvency proceedings?

    No idea. The company is not HK registered. I just know they are unreachable and have not paid the 1/10 price for storage for several months.

    If they aren't HK or Mainland registered, then I would imagine the property is as good as yours. I'm no lawyer but most bona vacantia rules only apply domestically.

    I think you've been more than fair with them, more so than anyone else would have been - but as you said, space is a luxury in HK and I think now it's more than fair if they haven't been in touch with you to try and reclaim some of your losses.

    Thanked by 1randvegeta
  • What does the contract say? Next step is to confirm if the contract is compliant with local and state laws.

  • randvegetarandvegeta Member, Host Rep

    @level6 said:
    What does the contract say? Next step is to confirm if the contract is compliant with local and state laws.

    Contract doesnt have an explicit clause for abandoned property.

    But it is general practice in HK that equipment can be used as collateral. Data Centres often absorb such equipment.

  • qpsqps Member, Host Rep

    Talk to a lawyer before you do anything.

  • @qps said:
    Talk to a lawyer before you do anything.

    Act first lawyer up second #yolo

  • @randvegeta said:

    This was a 'verbal' agreement

    feels like their bankruptcy Manager don't know about that verbal argument so they think it's already absorbed?

  • randvegetarandvegeta Member, Host Rep

    @omelas said: feels like their bankruptcy Manager don't know about that verbal argument so they think it's already absorbed?

    Contractually that is the case I guess.

    Lots of businesses have gone under during the pandemic. I really didn't want to add fuel to the fire.

    My hope was that they would get over it and be loyal customers when they made it through. Sadly.. most haven't made it though. None are out of the woods.

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