assignment for the benefit of creditors nevada

Assignments for the Benefit of Creditors – an often-overlooked state law alternative to Chapter 7 bankruptcy

For some folks the three letters ABC are a reminder of elementary school and singing a song to learn the alphabet. For others, it is a throw back to the early 70’s when the Jackson Five and its lead singer Michael, still with his adolescent high voice, sang a catchy love song. Then there is a select group of people in the world of corporate workouts, liquidations and bankruptcies, who know those three letters to stand for the A ssignment for the B enefit of C reditors – a voluntary state law liquidation process that may arguably offer a hospitable and friendly alternative to federal bankruptcy. This article is a brief summary of this potentially attractive alternative to bankruptcy.

The Assignment for the Benefit of Creditors (“ABC”), also known as a General Assignment, is a state law procedure governed by state statute or common law. Over 30 states have codified statutes, and the remainder of states rely on common law. See Practical Issues in Assignments for the Benefit of Creditors , by Robert Richards & Nancy Ross, ABI Law Review Vol. 17:5 (2009) at p. 6 (listing state statutes). In some states, the statutory authority and common law can coexist. At its most basic, the ABC process involves the transfer of all assets by a financially distressed debtor (the assignor) to an individual or entity (the assignee) with fiduciary obligations who then liquidates the assets and pays creditors. The assignment agreement is essentially a contract involving the transfer and control of property, in trust, to a third party. In some states that have enacted a statute, state courts may supervise the process (and at different levels of involvement depending on the statute). The statutory scheme in other states such as California and Nevada, and in states where common law govern, do not provide for judicial oversight..

ABCs are promoted as less expensive and more flexible than a chapter 7 liquidation and may proceed substantially faster than bankruptcy liquidation. See generally Practical Issues in Assignments for the Benefit of Creditors , ABI Law Review Vol. 17:5 (2009) at p. 8 (citations omitted). In addition, the ABC process may provide four other noteworthy benefits not available in a bankruptcy. First, the liquidating company chooses the assignee, there is no appointment of a random trustee or formal election required like in a bankruptcy. This freedom of choice allows the assignor to evaluate the reputation and experience of proposed assignees, as well as select an assignee with familiarity in the nature of the assignor’s business and/or with more expansive contacts in the industry to facilitate the sale/liquidation. Second, the ABC process generally falls under the radar of the media (particularly in states that do not require court supervision), and the assignor may avoid publicity, often negative, that can be associated with bankruptcy proceedings. Third, with an ABC, the assignee has the ability to sell the assets without the imposition of potentially cumbersome requirements of Section 363 of the Bankruptcy Code, and in some cases, can conduct a sale the same day as the general assignment. Finally, the ABC process generally authorizes the sale of assets free of unsecured creditor debt. In essence, in an ABC, a company buying assets from a distressed business does not acquire the debt of the assignor.

On the down side, ABCs do not provide the protection of the automatic stay that is triggered upon the filing of a bankruptcy petition. In some situations, the debtor entity needs to stop the pursuit of creditors immediately, and a bankruptcy proceeding will supply this relief. Unlike bankruptcy, the sale through an ABC: i) is not free and clear of liens; ii) unexpired leases cannot be assumed and assigned without the consent of the contract counter-party; and iii) insolvency can trigger a default under an unexpired lease or executory contract. See generally Practical Issues in Assignments for the Benefit of Creditors , ABI Law Review Vol. 17:5 (2009) at p. 20. In general, an ABC is not a good choice for debtors that have secured creditors that do not consent because there is no mechanism for using cash collateral or transferring assets free and clear of liens without the secured creditors’ consent. In cases where junior lienholders are out of the money, there is no incentive for those creditors to voluntarily release their liens. In addition, while unsecured creditors do not have to consent to the general assignment for it to be valid, choosing this alternative forum may cause concern for creditors (particularly those used to the transparency of a court-supervised bankruptcy or receivership proceeding) and invite the filing of an involuntary bankruptcy. Therefore, it is prudent to involve major creditors in the process, and perhaps even in the pre-assignment planning. In addition, if an involuntary petition is filed, the assignee could request that the bankruptcy court abstain in order to proceed with the ABC.

Using the ABC state process in lieu of filing for bankruptcy in federal court may result in a more streamlined, efficient liquidation process that is less expensive and likely completed quicker than a federal bankruptcy proceeding. In some jurisdictions, such as New Jersey, workout professionals note anecdotally that corporate clients fare better under this state law alternative rather than the lengthy, more complicated federal bankruptcy proceedings.

Many bankruptcy professionals are unfamiliar with the procedures of ABC and are reluctant to recommend it as a method for liquidating assets and administering claims. This lack of familiarity may be a disservice to potential clients.

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Assignments for the Benefit of Creditors: Overview | Practical Law

Assignments for the Benefit of Creditors: Overview

Practical law practice note overview w-006-7771 (approx. 19 pages).

Assignment For The Benefit Of Creditors: An Overview

Contributor.

What is an assignment for the benefit of creditors? An assignment for the benefit of creditors ("ABC") is an alternative to a chapter 7 bankruptcy proceeding. As in a chapter 7, the debtor's assets are shepherded and liquidated for the benefit of the debtor's creditors. An ABC is governed by statute and can either be court-supervised or conducted out of court. In New York, an ABC is governed by Article 2 of the Debtor and Creditor Law.

In an ABC proceeding, the debtor is referred to as an assignor, because it makes a transfer of all its assets to an assignee who serves as a trustee. The assignee is charged with placing all the assets in trust in order to liquidate and distribute the proceeds to creditors. While an ABC has many similarities with a chapter 7 liquidation, the two do differ in two important regards:

an ABC does not afford a debtor an automatic stay from creditor collection; and
a sale does not provide the purchaser with the right to purchase the assets free and clear of liens – unlike a 363 sale in Bankruptcy.

To commence an ABC, an assignor executes an assignment conveying all its assets to the assignee, who becomes a fiduciary on behalf of the assignor and its creditors. The assignee then collects and liquidates assets by collecting accounts receivable, conducting an auction sale, sometimes to a stalking horse bidder who starts the bidding, or through a going out of business sale.

An assignor also has powers under state law to recover fraudulent pre-ABC transfers of assets and preferential payments made to creditors. In New York, the "look-back period" for recovering these transfers is four years.

When it comes to distribution of the assets collected by the assignee, an ABC proceeding follows an established order of priority, which is set forth in either the state's unique ABC laws or in the deed of assignment. The assignee tallies the proofs of claim that were filed by the creditors in the proceeding and pays the claims, either in full or on a pro rata basis in accordance with the priority scheme.

After the assignor's assets have been liquidated and creditors have been paid out, the assignee must prepare an accounting detailing the flows of monies in and out of the estate during the case, which may have to be filed with the court supervising the proceedings. As part of the accounting process, the assignee asks the court to close the estate, which notifies all interested parties that (i) the estate has been fully administered, (ii) that the assignee's work is complete, (iii) that no further distributions need be made, and (iv) that the assignment is terminated.

An ABC is a useful, cost-effective alternative to a traditional chapter 7 bankruptcy liquidation, and may suitably serve liquidation requirements in some situations.

Originally published 03/07/2023

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Assignment for the benefit of the creditors (ABC)(also known as general assignment for the benefit of the creditors) is a voluntary alternative to formal bankruptcy proceedings that transfers all of the assets from a debtor to a trust for liquidating and distributing its assets. The trustee will manage the assets to pay off debt to creditors, and if any assets are left over, they will be transferred back to the debtor.

ABC can provide many benefits to an insolvent business in lieu of bankruptcy . First, unlike in bankruptcy proceedings, the business can choose the trustee overseeing the process who might know the specifics of the business better than an appointed trustee. Second, bankruptcy proceedings can take much more time, involve more steps, and further restrict how the business is liquidated compared to an ABC which avoids judicial oversight. Thirdly, dissolving or transferring a company through an ABC often avoids the negative publicity that bankruptcy generates. Lastly, a company trying to purchase assets of a struggling company can avoid liability to unsecured creditors of the failing company. This is important because most other options would expose the acquiring business to all the debt of the struggling business.

ABC has risen in popularity since the early 2000s, but it varies based on the state. California embraces ABC with common law oversight while many states use stricter statutory ABC structures such as Florida. Also, depending on the state’s corporate law and the company’s charter , the struggling business may be forced to get shareholder approval to use ABC which can be difficult in large corporations.

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Judgment Creditor's execution on the claims of a Judgment Debtor
posted: Jun. 19, 2020

The Nevada Supreme Court has recently addressed the ability of a Judgment Creditor to execute on the claims of a Judgment Debtor and dismiss an appeal; however the decision restricts those rights.

Nevada's general policy is that execution statutes must be liberally construed for the benefit of creditors, including the ability to execute on "rights of action” held by a Judgment Debtor but not a party's defenses to an action. The Nevada Supreme Court divided claims that can be executed upon into two categories: (a) those that can be assigned and (b) those that cannot be assigned, and held that "Things in action" only includes those claims that the judgment debtor has the power to assign. A judgment debtor's property is not subject to execution "unless the debtor has power to pass title to such property or interest in property by his . . . own act." Nevada generally prohibits the assignment of tort claims on public policy grounds, as many tort claims are personal in nature and meant to recompense the injured party. Fraud and intentional misrepresentation claims are personal in nature and unassignable. Personal injury claims likewise are unassignable because such claims would strip people of their right to pursue their personal injury claims and instead turn personal injury claims into commodities for sale.

However tort claims for injury to property rights were held to be assignable and thus subject to execution. More specifically negligent misrepresentation claims in Nevada only arise out of pecuniary loss, not personal injury. Claims alleging damages to property, rather than personal damages, are generally assignable. rights of action in tort involving damage to property are generally assignable because they do not include non-economic losses such as physical pain and mental anguish, and thus are more akin to the assignment of proceeds from a personal injury tort than to the assignment of the claim itself. Therefore the Nevada Supreme allowed the assignment of tort claims affecting property while prohibiting the assignment of personal injury tort claims.

Likewise contract-based claims were held to be assignable and subject to execution unless the obligations are personal in nature. So long as the contract is not a personal service obligation or the assignment would increase the party’s obligations, contract claims are assignable and subject to execution.

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Is an Assignment for the Benefit of Creditors like a Bankruptcy?

At first, an assignment for the benefit of creditors (ABC) may seem similar to a bankruptcy claim. However, upon a deeper look, it is clear that an assignment for the benefit of creditors is different. Similar to liquidation proceedings in chapter 7 or chapter 11 bankruptcy proceedings, an ABC can be used by either an individual or a business if they are going through significant financial difficulties. In both cases, the struggling debtor sells off all its assets in order to pay back its outstanding debts to its creditors. This mechanism helps to maximize the return for creditors.

An assignment for the benefit of creditors is distinct from bankruptcy proceedings because it is a much less formal process governed by state law rather than federal law. The informal nature of these proceedings means that it is faster and easier to marshal a debtor’s assets, liquidate same, and distribute proceeds equitably to creditors under an assignment rather than under federal bankruptcy law. Furthermore, an ABC often requires less court involvement and provides more flexibility to the assignee to make liquidation decisions as required. This is generally beneficial for both creditors and debtors because it is faster, less expensive, and more private than traditionally afforded bankruptcy liquidations.

Understanding Assignment for the Benefit of Creditors in New Jersey

In New Jersey, an assignment for the benefit of creditors is governed by New Jersey statutes that codify the preexisting common law. The proceedings are voluntary processes whereby the debtor designates an assignee who is empowered to marshal and liquidate (sell) the assets of the debtor and then distribute the proceeds of the sale to the debtor’s creditors. The assignee must ensure that all of the financial liquidations are done for the benefit of the creditors and with the sole goal of repaying outstanding debts. This is significant because in New Jersey, the debtor can choose its assignee rather than relying on a court-appointed trustee in bankruptcy who may not understand the nuances of the debtor’s finances. The ability to choose the assignee can be beneficial because an assignee with an understanding of the debtor’s finances can expedite the liquidation process rather than spend valuable time learning the ropes.

An ABC in New Jersey is generally cheaper than filing formal bankruptcy proceedings because it is faster and usually requires less litigation. The expeditious nature cuts down on the debtor’s and creditor’s legal bills and other costs associated with ongoing litigation. Still, creditors should be counseled to make sure that the liquidation is being conducted properly, and that the assignee is obtaining a fair return on the sale of the assets to maximize the recovery of the debts owed to the creditors.

FSKS is on Your Side

At FSKS, our attorneys are experienced in both bankruptcy and assignments for the benefit of creditors in New Jersey. We have a strong track record of success in the area of creditor’s rights and pride ourselves on being one of the strongest and most successful Creditors’ Rights firms in New Jersey, New York, and Pennsylvania. We’re ready to give you trusted advice and help maximize your return.

If you require assistance with or have questions regarding an assignment for the benefit of creditors in New Jersey, please contact Vincent DiMaiolo, Jr. ( [email protected] ), Nicholas Canova ( [email protected] ), or Tammy L. Terrell-Benoza ( [email protected] ) at (973) 538-4700 .

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Business Bankruptcy and Corporate Debt Restructuring Expertise

McDonald Carano’s Nevada business bankruptcy attorneys represent debtors, creditors’ committees, secured and unsecured creditors, equity holders, lenders, investors, and trustees involved in Chapter 7 liquidation and Chapter 11 liquidation/reorganization bankruptcies. We also represent troubled companies, boards of directors, management, and owners. Our Nevada bankruptcy lawyers also advise on purchasing and selling assets from insolvent entities as well as guiding out-of-court workouts and corporate debt restructurings.

Our business bankruptcy attorneys advise clients from the time they start evaluating alternatives and begin pre-petition planning through to final plans for reorganization. We also analyze and execute workout alternatives outside of bankruptcy court proceedings by shaping the solution to fit the problem. Because bankruptcy is not always the best choice for clients in financial distress, we advise on the complete array of alternatives, including the assignment for the benefit of creditors, renegotiating bank loans and covenants, revising debt instruments, working out payment plans with vendors, corporate debt restructuring, or rightsizing the client’s business. We also negotiate cash collateral agreements and re-document loans and obtain relief from stay.

The litigation attorneys in our bankruptcy practice have experience litigating (both prosecuting and defending) the full range of contested and adversary matters including fraudulent conveyances and other preferences, foreclosure proceedings, stay and cash collateral proceedings, default debtors, breach of fiduciary duty claims, turnover actions, contested auctions and sale hearings, and post-emergence litigation. Our attorneys have served as law clerks and externs for judges in the Bankruptcy Court for the District of Nevada.

Our team has been recognized for many awards, including recognition in Super Lawyers Magazine , Vegas Inc./Las Vegas Weekly , and Nevada Business Magazine . The practice group is ranked in the highest Tier 1 category in the Best Law Firms report published by U.S. News–Best Lawyers and numerous attorneys in the group have received Lawyer of the Year recognition in The Best Lawyers in America .

Our experience includes:

• Adversary litigation. • Asset acquisitions and dispositions. • Assignment for the benefit of creditors. • Avoidance actions. • Cash collateral agreements. • Corporate reorganizations. • Creditors’ Committee representation. • Debt collection and recovery. • Debt restructurings. • Foreclosures. • Lender liability. • Out-of-court workouts. • Secured creditor representation.

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Receiverships, ABCs and Bankruptcy: A Comparison

Introduction

For the past several decades, when commercial borrowers, their partners and creditors have faced a deadlock or a default, they have preferred resolution of disputes in the Bankruptcy Courts. The Bankruptcy System has provided extraordinary remedies, specialized commercial judges, and an expedient, cost-effective forum for relief.

However, the Bankruptcy System has become expensive, with Bankruptcy attorneys charging hourly rates near the upper end of all lawyers’ fees. The system has become bureaucratized; the advent of the United States Trustee’s system has increased the number and cost of required filings, meetings, and court hearings. The bankruptcy statute, with its unique remedies, has been expanded with special interest sections and marginalized by a hostile Congress. Relief for debtors — consumers, individuals beset by commercial problems, single asset real estate entities, and small businesses — no longer seems to be the focus of a system more intent on procedure and suspicion.

A review of the recent case law reveals an institution, refocused by the Executive Branch, Congress, and the Supreme Court. The Court and its trustees seem to no longer be able to serve their traditional responsibility of providing a “fresh start.” Instead, as the credit industry has convinced Congress, the Bankruptcy System is left to raise the bar, and the cost, for relief, while a populace of financially troubled consumers and businesses look elsewhere.

This outline examines two debtor-creditor procedures: receiverships and assignments for the benefit of creditors .

The laws are less comprehensive and local in nature; they are however cheaper, often working with alternative dispute resolution procedures, and are largely administered by the parties and their attorneys with the imprimatur of a laissez-faire judicial system. Bankruptcy remedies are, in certain situations, still unique and this article details situations where the Bankruptcy Court is still preferable to other remedies.

Receiverships

Receiverships are most common in real property foreclosure situations. Pending trustee’s sales or judicial foreclosures, mortgage lenders may at times desire their collateral be placed in the hands of independent caretakers. Provisions for receivers are routinely included in trust deeds and mortgages. Some states’ laws now make clear that the remedy of receivership can be the subject of a court complaint, without the plaintiff needing to include substantive counts for judicial relief. This permits the appointment of a receiver, while a party seeks non-judicial relief, e.g., a non-judicial foreclosure like a trustee or UCC sale.

Receivers can also play a valuable role in deadlocked or dissolving business entities. Complaints seeking dissolution or division of assets often include a second count praying for the appointment of a receiver to hold the assets being liquidated or divided or to even accomplish the monetization and distribution of assets.

Private, as well as public parties, may use receiverships where there are allegations of fraud, breach of fiduciary duties, or Ponzi schemes. Receiverships can assist victims in preserving assets while criminal or civil fact-finding is on-going.

Receiverships have been used increasingly in the recent downturn in the economy, both in real estate and business cases. Lenders are allowing borrowers additional time to raise capital or sell assets, so long as the collateral is being overseen by a fiduciary. Defaulting borrowers and their lenders are agreeing to receiverships so that feasibility studies and appraisals can be accomplished by industry experts, feasibility consultants, brokers and valuation experts. Equipped with independent analysis, the parties can proceed cooperatively or adversely as they choose.

Receiverships are not bound by the timelines imposed by the bankruptcy laws or judges. Cases may remain pending while the parties evaluate a turbulent market, allow the market to steady, or while the parties search for a business solution. Bankruptcy relief remains an option should the parties’ interests diverge precipitating foreclosure, litigation, or funding termination.

Assignment for the Benefit of Creditors (ABC)

An assignment for the benefit of creditors (ABC) is a voluntary transfer by a debtor of all of the debtor’s non-exempt property to an assignee in trust to apply the property for, or (more usually) to liquidate the property and pay its proceeds to, the debtor’s creditors. The assignment procedure is treated much like a probate/receivership, and the assignee has the same relationship with the court as a court-appointed receiver. The assignee may bring actions on behalf of the assignor and creditors for fraudulent conveyances, and can have the status of a lien creditor, generally entitling the assignee to avoid unperfected security interests in the debtor’s property .

An ABC provides that an insolvent debtor may assign all of his assets to a third party designated as an ‘assignee’ for the benefit of his creditors. Any attempted preference, in the assignment, of one creditor or creditors of the assignor, is fraudulent and without effect. Any creditor who consents to the assignment is entitled to share in the assets so assigned, and by so consenting agrees to take his proportional share of the assets and thereby discharge the debtor from all further liability.

However, only consenting creditors are allowed to share in the assets and non-consenting creditors retain their cause of action for their total indebtedness against the debtor but are not allowed to share in the distribution of assets. An assignment for the benefit of creditors may be effective only to a portion of the debtor’s creditors, or to all. The benefits of the assignment flow only to those creditors who consent to the arrangement, and they must release their claims when paid their proportionate share of the estate. Where a debtor executes an assignment for the benefit of creditors, creditors retain the right to file an involuntary bankruptcy petition after the assignee was appointed or took possession.

A debtor’s petition for Assignment for Benefit of Creditors is sometimes filed with the Court of the county where the debtor’s principal place of business is conducted and the Court has the same jurisdiction over the insolvent estate and the assignee as that of a receiver appointed by the court. Following the filing of Creditor’s Consent and Claims, the assignee is empowered to reduce the debtor’s assets to cash, pay the consenting creditors’ proven claims proportionately, receive discharges from these creditors and terminate the assignment ABC’s have application in small business settings when the creditor body is generally aware of the debtor, its assets, and the reason for failure.

The stigma of bankruptcy can be avoided; the parties can pick their own “Assignee”, eliminating the involvement of a trustee or bankruptcy judge. Disclosure of assets and creditors is necessary and specifically required, but the other documentation and requirements of a bankruptcy petition are avoided. The expense of an Assignee can exceed the cost of a bankruptcy filing, though the tradition of appointing an “industry elder” as the assignee can mitigate this administrative cost and maximize return to creditors in an insolvency.

While some state statutes specifically provide that actions taken pursuant to common law Assignments are void, they are still available to a debtor and a body of creditors who participate and where creditors accept “payment in full” upon distribution of proceeds.

Most debtors seeking bankruptcy relief have “corporate creditors” who are unlikely to participate in an ABC. Situations may arise in the construction industry or similar fields where familiarity between the Assignor and the creditors would allow an ABC, and permit a debtor to avoid the “means-testing” and other hurdles of a bankruptcy discharge.

Unique Bankruptcy Remedies

Automatic stay.

A bankruptcy filing results in the issuance of the automatic stay. This terminates all collection proceedings, all collection attempts and all litigation. When you absolutely, positively have to put a stop to litigation, a foreclosure or garnishment, there is nothing as effective as the automatic stay in bankruptcy.

Sales Free and Clear of Liens, Claims and Encumbrances

The Bankruptcy Code uniquely allows a bankruptcy court to sell a property, passing clean title with all liens, claims and encumbrances attaching to the proceeds. Again, where there is a sale of troubled property involved in litigation or property subject to title disputes, the Bankruptcy Court can order and approve the property’s sale with liens and claims against the property transferred to the proceeds of the sale.

Rejection of Leases or Burdensome Contracts

When a business is subjected to a burdensome lease or an executory contract that is interfering with its continued operation or its reorganization, the Bankruptcy Code uniquely allows such a lease/contract to be rejected. The non-debtor party is given a “pre-petition” claim against the business and the debtor is excused from performance on the lease or contract.

Plans of Repayment

The Bankruptcy Code permits reorganization plans that can restructure payment terms, interest rates and other loan provisions. A plan of reorganization is comprehensive, in that it can propose changes in repayment terms for one or all of the debtor’s obligations. The repayment terms must be voted on by the creditors, but can be approved by the court over the rejection of certain creditors, so long as the repayment plan is fair and equitable and does not discriminate unfairly against a particular creditor or creditors.

Debtor-in-Possession Financing

When a troubled business or project needs new financing, the provisions of the Bankruptcy Code permit this to be done in such a manner that provides comfort to “DIP Lenders.” The ability of the bankruptcy court to approve such loans and the security for such loans, including priming liens, even over creditor dissent, is a unique bankruptcy remedy.

Dealing with the Dishonest or Unscrupulous Debtor

Creditors or business partners dealing with an unscrupulous or dishonest individual often have greater comfort when operations are placed under the protection of the bankruptcy laws. The specter of federal, criminal prosecution and the oversight provided by the United States Trustee and bankruptcy judges can often normalize operations. Many lenders finding their borrowers in a default situation are more comfortable when their borrower is required to account to the bankruptcy court and obtain court authorization for all extraordinary actions.

Familiarity

To some extent, people, parties and businesses know what to expect from bankruptcy. Commercial entities generally have procedures and protocols to deal with bankruptcies. Workouts, receiverships, or assignments for benefit of creditors are often perceived as secretive, foreign proceedings. When dealing with large numbers of creditors, bankruptcy and its familiar procedures are also at times more manageable than other remedies.

Bankruptcy laws continue to provide certain remedies and procedures that cannot be found anywhere else. That being said, business parties may not always be willing to turn over their financial fates to a bankruptcy judge. A less intrusive receivership proceeding may, in certain instances, be more desirable. When a developer finds himself upside down in a project and a handful of creditors are owed money and can look to the build-out of the project, an assignment for the benefit of creditors may be a quicker, less expensive and more appropriate workout tool, than a bankruptcy case.

An informed and trusted commercial real estate broker can often serve as a receiver or as an Assignee in an assignment for benefit of creditors. Such state court remedies avail themselves of the expertise and local knowledge that a broker may have about a particular situation. In other instances though, a bankruptcy proceeding actively overseen by an independent judge may be preferable. This information is provided as a matter of information and education only. It is not intended to provide legal advice or counsel. Do not take action in specific cases without full knowledge of the facts, and competent legal advice from your attorney .

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State Law Comparison Tool for ABCs

You represent several troubled companies and need to explore whether an assignment for the benefit of creditors (ABC) is a viable non-bankruptcy alternative for your clients. Practical Guidance allows you to compare ABC statutes in several states with the State Law Comparison Tool which is live with 12 top jurisdictions!

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What are assignments for the benefit of creditors?

Assignments for the benefit of creditors (ABCs) are an alternative to formal bankruptcy proceedings. Under Florida law, an ABC is a voluntary, out-of-court process where a debtor transfers their assets to an assignee, who then liquidates these assets and distributes the proceeds to the debtor’s creditors.

For example, a struggling business in Florida may pursue an ABC instead of filing for bankruptcy. This choice can be advantageous because it is often faster, less expensive, and less public than a formal bankruptcy filing. The business would transfer its assets to an assignee responsible for selling these assets and distributing the proceeds to the creditors following the priorities established by Florida law.

Need a bankruptcy law advocate? Schedule your consultation today with a top bankruptcy and restructuring attorney.

Which Florida laws and regulations apply to assignments for the benefit of creditors?

The primary source of law governing ABCs in Florida is Chapter 727 of the Florida Statutes . This chapter outlines the process for initiating an ABC, the assignee’s role, and the creditors’ rights. Additionally, the Florida Rules of Civil Procedure may apply to certain aspects of an ABC, such as serving notice to creditors and managing creditor claims.

Federal laws, such as the Bankruptcy Code , generally do not apply to ABCs because they are state law alternatives to bankruptcy. However, it is essential to note that federal laws may still impact an ABC in certain situations, such as when a debtor’s assets are subject to federal tax liens or other federal claims. In these cases, debtors must consult a knowledgeable attorney to navigate the interplay between state and federal laws.

How do assignments for the benefit of creditors connect to the bankruptcy process?

The connection between pursuing an ABC and bankruptcy legal services for debtors lies in their shared goal of providing relief to financially distressed individuals or businesses. Both processes involve the liquidation of assets and the distribution of proceeds to creditors. However, ABCs are generally less formal, less expensive, and more private than bankruptcy filings, making them an attractive option for debtors seeking to avoid the stigma and complexities associated with bankruptcy.

In an ABC, a debtor voluntarily transfers their assets to an assignee who liquidates them and distributes the proceeds to creditors. This process differs from a bankruptcy proceeding, where a court-appointed trustee oversees the operation. Furthermore, while strict federal rules and procedures bind bankruptcy cases, ABCs offer more flexibility, allowing parties to tailor the process to their needs.

When a set of facts is appropriate for bankruptcy services, there are many paths a claimant may take. We are value-based attorneys at Jimerson Birr, which means we look at each action with our clients from the point of view of costs and benefits while reducing liability. Then, based on our client’s objectives, we chart a path to seek appropriate remedies.

To determine whether your unique situation may necessitate litigation or another form of specialized bankruptcy advocacy, please contact our office to set up your initial consultation.

What are the prerequisites for debtors to pursue assignments for the benefit of creditors?

Consider the following:

Voluntary action: The debtor must willingly initiate an ABC, as this process is a voluntary alternative to bankruptcy.
Valid assignment: The debtor must properly execute and deliver the assignment to a qualified assignee, who is often an attorney, accountant, or insolvency professional.
Recording the assignment: The assignee must record the assignment in the county’s public records containing the debtor’s principal place of business.
Filing notice: The assignee must file a notice of the assignment with the circuit court clerk in the county where the debtor recorded the assignment.
Notifying creditors: The assignee must provide written notice to all known creditors of the debtor within 20 days of the assignment, informing them about the ABC process and their rights.

By satisfying these requirements, the debtor can effectively pursue an ABC in Florida, which allows for a more personal and flexible approach to resolving financial difficulties compared to bankruptcy.

Please contact our office to set up your initial consultation to see what forms of legal protection and advocacy may be available for your unique situation.

Frequently Asked Questions

Can a debtor choose any person as an assignee for an ABC?

No, not just anyone can be an assignee. The assignee must be a disinterested person who is not an insider of the debtor and is qualified to manage the debtor’s assets and affairs. Assignees are typically professionals, such as attorneys, accountants, or insolvency experts.

Does an ABC in Florida prevent creditors from pursuing legal action against the debtor?

Unlike bankruptcy, an ABC does not automatically halt legal actions by creditors. However, creditors may agree to a standstill or moratorium on legal actions while the ABC process is ongoing. This outcome may depend on the specific circumstances and the willingness of the creditors to cooperate.

How does an ABC affect the debtor’s credit rating?

Although an ABC may be less public and stigmatizing than bankruptcy, it can still harm the debtor’s credit rating. Credit reporting agencies may treat an ABC as a similar event to a default, which can lower the debtor’s credit score and make it more difficult for them to obtain future credit or loans. However, the impact on the credit rating may vary depending on the specific circumstances of the case and the debtor’s credit history before the ABC. Therefore, debtors must work closely with financial advisors and credit counselors to rebuild their credit after an ABC process.

Have more questions about how bankruptcy services could positively impact your business operations and relationships?

Crucially, this overview of assignments for the benefit of creditors does not begin to cover all the laws implicated by this issue or the factors that may compel the application of such laws. Every case is unique, and the laws can produce different outcomes depending on the individual circumstances.

Jimerson Birr attorneys guide our clients to help make informed decisions while ensuring their rights are respected and protected. Our lawyers are highly trained and experienced in the nuances of the law, so they can accurately interpret statutes and case law and holistically prepare individuals or companies for their legal endeavors. Through this intense personal investment and advocacy, our lawyers will help resolve the issue’s complicated legal problems efficiently and effectively.

Having a Jimerson Birr attorney on your side means securing a team of seasoned, multi-dimensional, cross-functional legal professionals. Whether it is a transaction, an operational issue, a regulatory challenge, or a contested legal predicament that may require court intervention, we remain tireless advocates at every step. Being a value-added law firm means putting the client at the forefront of everything we do. We use our experience to help our clients navigate even the most complex problems and come out the other side triumphant.

If you want to understand your case, the merits of your claim or defense, potential monetary awards, or the amount of exposure you face, you should speak with a qualified Jimerson Birr lawyer. Our experienced team of attorneys is here to help. Call Jimerson Birr at (904) 389-0050 or use the contact form to schedule a consultation .

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Is an assignment for the benefit of creditors (abc) better than bankruptcy.

When a company has exhausted all available remedies to turn itself around and wishes to wind down its business in an orderly manner, an Assignment for the Benefit of Creditors [1] (“ABC”) can be a cost-effective and relatively quick way to sell the assets and distribute the proceeds to creditors. Assignments are creations of state law, so unlike bankruptcy, which is governed by a uniform federal code, the laws governing assignments will vary across each state.

Here’s how an ABC proceeding compares with bankruptcy [2] :

Who can file an assignment for the benefit of creditors.

Nearly any insolvent business can avail itself of an ABC. The company must obtain shareholder approval which may make it impractical for a public company to avail itself of an ABC. A board resolution is also required authorizing the assignment.

How does an assignment start?

An assignment begins with the company (the “assignor”) reaching an agreement with the firm or individual (the “assignee”) who will act as a fiduciary on behalf of the assignor’s creditors. The agreement will transfer all rights, title and interest to the assignee who then liquidates the assets and distributes proceeds to the creditors.

What are positive attributes of an assignment?

The sale of assets under an assignment are completed faster than a 363 sale in bankruptcy because assignments do not require a court process. There are no pleadings, bid procedures, and sales motions to file.
Management and the assignee work collaboratively on preparing communications about the assignment. This alleviates negative publicity of the winddown whereas a bankruptcy liquidation is a very public process.
Management controls the selection of the assignee. In bankruptcy, there are many parties with a voice in the process, such as the court, the Office of the United States Trustee and the unsecured creditors committee. And, in a Chapter 7 bankruptcy, a trustee will be appointed to sell the assets.
An assignment does not cost nearly as much as a 363 sale in bankruptcy. The assignor only has to pay the assignee’s fees and costs. In a bankruptcy, the debtor not only has to pay for its professionals, but also the unsecured committee’s professionals. Furthermore, since the bankruptcy process is so much longer than the assignment, the debtor has to pay for both sets of professionals over a longer period of time.
An assignment provides a way to shield the officers, directors and the buyer from litigation of a fraudulent transfer of the assets to the buyer.
The ability to complete the sale quickly by the assignee reduces the disruption caused by a bankruptcy filing and helps to maintain continuity of the business thus saving jobs.

What are the limitations of an assignment?

An assignment does not provide an automatic stay which means creditors can continue to pursue actions against the assignor. However, since the secured lender is a cooperating party in an assignment, the risk of the secured lender foreclosing on its collateral is unlikely.
An assignee cannot assign executory contracts to the buyer. The assignee must get the contract counterparts, such as a landlord, to agree to accept the buyer as the new obligor.
An assignee cannot sell assets “free and clear” of liens or “cram down” the secured lender as in bankruptcy. Thus, the secured lender must agree to the sale if the secured lender isn’t going to be paid in full with the sales proceeds.

What does the assignee do during the pre-assignment period?

From the commencement of the assignment until the date the assets are transferred to the assignee, the assignee will be working with management in conducting its due diligence on the background of the company, the liabilities, any litigation, reviewing debt agreements and collateral positions, and ascertaining the highest and best offer for the assets (reviewing the company’s marketing efforts as well as performing its own marketing efforts, if necessary). It is during this period that most of the cost of the assignee will be incurred.

What does the assignee do during the assignment?

Upon the effective date of the assignment, the assignor transfers its assets to the assignee. The assignee often then immediately sells the assets. The assignee will contact the unsecured creditors and notify them of the assignment and the bar date which is the deadline for the creditors to file their claims. The assignee will distribute proceeds from the sale, if any [3] , to the unsecured creditors.

Companies in distress should consider an Assignment for the Benefit of Creditors vs. bankruptcy to more more quickly satisfy creditors, conserve any remaining capital, avoid negative publicity and benefit from a more timely dissolution.

EMAGroup advises companies in transition, focusing on Special Situations, Capital Solutions, Enterprise Performance Improvement, and Insolvency Strategies to create value-driven solutions. For more information, visit: https://www.ema-group.com .

[1] An ABC is a state law creation, so rules and regulations vary by state. It is important to retain counsel familiar with the assignment laws applicable to your state.

[2] In California

[3] As is often the case, the sale proceeds are not sufficient to pay the secured lender’s claims in full which means there are not distributions to the unsecured creditors.

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Equity Development Systems, Ltd. | Wall Street Smarts...Main Street Sense™

Assignment for the Benefit of Creditors

A symphony of wall street smarts … main street sense™, skillfully and judiciously maximizing value for all stakeholders, a symphony of wall street smarts … main street sense™ assignment for the benefit of creditors services (abc) general assignment | creditor assignment.

An Assignment for the Benefit of Creditors (ABC) or General Assignment/Creditor Assignment can be a prudent alternative to bankruptcy for maximizing value for troubled private and public companies and their creditors.

An Assignment for the Benefit of Creditors (ABC) is a legal process in which a debtor assigns all of its assets to an independent third party, called an assignee, that’s us, to liquidate the assets and pay off the creditors. This process is a bankruptcy alternative, and it allows a debtor to avoid the lengthy and costly bankruptcy process while still getting relief from creditors.

For over 40 years in assignments worldwide, Equity Development Systems, Ltd has brought A Symphony of Wall Street Smarts … Main Street Sense ™ in skillfully guiding and judiciously representing business owners, creditors, investors, attorneys and law firms, and myriad other stakeholders in the disposition of their troubled accounts and we have successfully managed and generated Billions of Dollars for our global clientele in the conversion of their distressed assets to cash.

From National Priority List Superfund Sites—to a Decommissioned Nuclear-Powered Aircraft Carrier—to the Pencils-on-the-Desk—we handle it all, and we have successfully managed and generated Billions of Dollars for our global clientele in the conversion of their distressed assets to cash.

Award-Winning Services Our award-winning Receivership Services have earned us the distinction of being the only Court-Appointed Receiver in the country that the United States Environmental Protection Agency (USEPA) allows to conduct Asset Recovery and Divestiture Services on active Superfund Sites. We are pleased to serve as Court-Appointed Keepers (Asset Recovery) for the U.S. Marshals Service for federal court seizures of assets under admiralty jurisdiction.

We handle it all commercial | industrial | residential real estate developments | hoa and golf communities/resorts | environmentally impaired real and moveable property | hospitality/gaming | shipyards/admiralty/maritime | aviation (fixed and rotor) | automotive (manufacturing and retail) | heavy industrial manufacturing | oil & gas/minerals | and more..., 24/7/365 onsite crisis / interim / turnaround management teams our turnaround management and restructuring teams marshal onsite 24/7/365 throughout the world to provide the complete spectrum of crisis/interim and turnaround management services., testimonials, the actions undertaken on behalf of signal capital have established a level of confidence that has resulted in epa allowing signal to dispose of movable property on the facility in a way that most secured creditors would ordinarily not enjoy. in fact, i know of no other analogous situation where the epa region 6 removal program has cooperated with a secured creditor to the extent it has due to your efforts., senior attorney.

USEPA, Region 6

Such a relationship generally does not develop whereby EPA would permit a secured creditor to liquidate uncontaminated movable property due to the realistic concern that such actions would aggravate existing environmental problems or would interfere with EPA’s removal action. It is not at all unusual that in EPA’s proper exercise of its CERCLA responsibilities such accommodations are flatly rejected.

Notwithstanding that general approach, you have demonstrated a level of responsibility and credibility that has warranted a different approach for epa in this matter..

USEPA , Region 6

Assignment for the Benefit of Creditors Services

Maximizing value for all stakeholders.

An Assignment for the Benefit of Creditors (ABC) is a legal process in which a debtor assigns all of its assets to an independent third party, called an assignee, to liquidate the assets and pay off the creditors. This process is a bankruptcy alternative, and it allows a debtor to avoid the lengthy and costly bankruptcy process while still getting relief from creditors.

The debtor will appoint an assignee, that’s us, who will take possession of all the assets of the debtor and will be responsible for liquidating them and distributing the proceeds to the creditors according to the priority of their claims. We will then be responsible for identifying, collecting, and liquidating all assets, and for making payments to the creditors.

The ABC process is usually faster than bankruptcy and it allows the debtor to have more control over the liquidation process. It also provides a way for the debtor to avoid the negative impact of a bankruptcy filing on its credit rating. However, there are also some limitations to the ABC process, such as a lack of protection from certain types of claims and a lack of automatic stay to halt litigation against the debtor.

It’s important to note that the laws regarding ABC vary state by state, and the process may have different names depending on the location.

The process of an Assignment for the Benefit of Creditors is initiated by the distressed entity (assignor) entering into an agreement with the assignee responsible for conducting the wind-down and/or liquidation or going concern sale in a fiduciary capacity for the benefit of the assignor’s creditors. The assignment agreement is a contract under which the assignor transfers all of its right, title, interest in, and custody and control of its property to the assignee in trust. The assignee divests the property and distributes the proceeds to the assignor’s creditors.

Our award-winning services have earned us the distinction of being the only Court-Appointed Receiver/Assignee in the country that the United States Environmental Protection Agency (USEPA) allows to conduct such services on active Superfund Sites.

We are pleased to serve as Court-Appointed Keepers (Assignees) for the U.S. Marshals Service for federal court seizures of assets under admiralty jurisdiction.

An Assignment for the Benefit of Creditors requires highly-trained—highly skilled—highly credentialed—highly experienced special assets and special situations transitional management, valuation, and disposition experts with decades of proven experience and unimpeachable credibility.

For over 40 years in hundreds of assignments worldwide, Equity Development Systems, Ltd. has skillfully guided and judiciously represented business owners, creditors, investors, attorneys and law firms, and myriad other stakeholders in the disposition of their troubled accounts.

We specialize in handling the disposition of complex and highly-contentious special assets and special situations: Environmentally Impaired Real and Moveable Property (Superfund and Brownfields Sites), Hospitality, Gaming, Resorts, Shipyards /Admiralty/Maritime, Aviation (Fixed and Rotor), Automotive (Manufacturing and Retail), Heavy Industrial, Oil & Gas/Minerals, Commercial and High-Value Residential Real Estate.

No assignment is too small or too large for EDS.

The process of an Assignment for the Benefit of Creditors

The basic process in an Assignment for the Benefit of Creditors is that the business (Assignor) turns over its assets, both real and moveable, to an independent third-party neutral (Assignee [EDS]) who is the responsible fiduciary for divesting the assets and settling with creditors.

An Assignment for the Benefit of Creditors is a voluntary and arms-length transaction that provides a speedy, orderly disposition and equitable liquidation of the firm’s assets and subsequent distribution to its creditors. It is similar to a Chapter 7 liquidation process but is far quicker and much less expensive and, therefore, generally derives a larger distribution to all creditors.

EDS experts marshal on-site 24/7/365 throughout the nation to secure and operate troubled accounts facing operational or financial challenges. Our experts work diligently with all stakeholders to preserve, protect, maintain, and enhance the enterprise value of the business and business assets that might otherwise be lost during costly and fruitless bankruptcies.

Assets Held in Trust: By operation of law, all assets are held in trust upon acceptance of the Assignment. These assets and the funds realized therefrom are protected against creditor claims. The assets are then liquidated, and the proceeds, less administrative expenses, are distributed to all creditors according to their lawful priority class. The order of priority is very similar to that used by the Trustee in a bankruptcy proceeding.

Duties of the Assignee: The Assignee has similar duties to a Trustee in Bankruptcy. The Assignee is charged with acting in a business-like manner in the disposition of the assets. The Assignee has considerable flexibility in the methods used and does not have to obtain consent or have a hearing to ratify his or her actions.

Fees: Unlike Bankruptcy, no upfront fees are required. The fee amount is determined before signing the documents and becoming part of the General Assignment agreement. The fees for the Assignee are paid as an administrative expense from the proceeds recovered.

Advantages of an Assignment for the Benefit of Creditors or Creditor/General Assignment: An Assignment does not require court adjudication or consent in most states, nor does it require the consent of creditors. It does not have the stigma of bankruptcy and frequently benefits the company’s principals, who nearly always guarantee the lender obligations of the company. Because an Assignment avoids the administrative procedures that govern bankruptcy, there is a considerable reduction in the cost of disposition and the time necessary to sell the assets. The consequence is greater flexibility in divestiture methods and options, resulting in greater returns for creditors. An Assignment for the Benefit of Creditors is an option that should always be considered as an option to bankruptcy.

EDS’s unparalleled level of Assignment for the Benefit of Creditors expertise is recognized and appreciated nationwide.

EDS’s unparalleled level of expertise is recognized and appreciated in boardrooms and courtrooms throughout the world. How may we be of service to you?

Equity Development Systems, LTD.

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assignments benefits creditors abcs basics california

Assignments for the Benefits of Creditors - "ABC's" - The Basics in California

An assignment for the benefit of creditors (“ABC”) is a contract by which an economically troubled entity ("Assignor") transfers legal and equitable title, as well as custody and control, of its assets and property to an independent third party ("Assignee") in trust, who is required to apply the proceeds of sale of the property to the assignor's creditors in accord with priorities established by law.

ABCs are a well-established common law tool and alternative to formal bankruptcy proceedings. The method only makes sense if there are significant assets to liquidate. ABCs are most successful when the Assignor, Assignee and creditors cooperate but can be imposed even if the creditors are not supportive.

Assignors - Rights and Duties

Generally, any debtor – an individual, partnership, corporation or LLC - may make an assignment for the benefit of creditors. Individuals seldom utilize ABCs, though, because there is no discharge of all debts as there would normally occur in a completed bankruptcy filing. Thus, the protection and benefit of the process is quite limited for any personal obligor.

ABCs can benefit individual principals who have personally guaranteed company obligations or have personal liability on tax claims. Once the Assignment Agreement has been executed, a trust is automatically put in place over the assets transferred. The Assignor can neither rescind the contract nor control the proceedings, but the Assignor may be consulted as necessary and appropriate by the Assignee during the liquidation process.

Assets to be Assigned

Assignor may assign any non-exempt real, personal, and/or general intangible property that can be sold or conveyed. Note that such assets as intellectual property, trade names, logos, etc. may be so transferred and sold. When a corporation makes an assignment, all corporate property, tangible and intangible is transferred including accounts, and rights and credits of all kinds, both in law and equity. The assets only can be sold, not the corporation or its stock. Thus the corporation remains existing, albeit without any significant assets left. It becomes, effectively, a shell.

Assets are typically sold without representations or warranties. The sale is free and clear of known liens, claims and encumbrances - with the consent or full payoff of lien holders. Generally, Assignee warrants only that Assignee has title to the assets.

Assignees - Rights and Duties

The Assignee is generally an unrelated professional liquidator selected by the Assignor. The Assignee gathers the Assignor’s assets and sells the Assignor’s right, title and interest in those assets, then distributes the proceeds to Creditors in accordance with statutory priorities.

The Assignee has a fiduciary duty to the Creditors. Assignee’s duties include protecting the assets of the estate, administering them fairly and representing the estate. Assignee is free to enter into contracts to recover assets or liquidated claims, e.g. filing suit or taking other action.

The Assignee may be removed by a court for violations of the Assignment contract or nonfeasance (failure to act appropriately). The Assignee may not give up his/her/its duties without liability or a superior court order until creditors receive distribution of the proceeds of sale of the assets transferred.

Assignee usually prepares the Assignment documents, though the attorney for the Assignor may draft them as well. Often the terms are negotiated at length.

Preferential Claims and Avoidance

Assignee has statutory avoidance powers, similar to those granted to a Chapter 7 bankruptcy trustee. [See Calif. CCP § 493.030 (termination of lien of attachment or temporary protective order), § 1800 et seq. (avoidance of preferential transfers); Calif. Civ.C. § 3439 et seq. (avoidance of fraudulent conveyances)]

Even so, courts may question this right outside a bankruptcy proceeding. There is also disagreement between the Federal Court (Ninth Circuit) and California state courts whether the Bankruptcy Code preempts the assignee's preference avoidance power under California statutory law.

Creditors - Rights and Duties

While not required to consent to an Assignment, secured creditors often must agree in advance since their cooperation frequently affects the liquidation of the assets. Secured creditors are not barred from enforcing their security by such an assignment. The acceptance of an Assignment by unsecured creditors is not necessary, since under common law the proceedings are deemed to benefit them through equality of treatment.

Note that all Creditors must file their claims within the statutory 150-180 day claim filing period.

ABCs in California do not require a public court filing, but most corporations require both board and shareholder approval. Costs and expenses, including the assignee’s fees, legal expenses and costs of administration, are paid first, just as in a Chapter 7 bankruptcy . Because an assignee’s fee is often based on a percentage value of the assigned assets, it can be difficult to procure assignees for smaller estates.

Assignment Agreement is executed and ratified. Assignor turns over and assigns to Assignee all right, title and interest in the assets being assigned.
Assignor gives Assignee a complete, certified list of creditors, including addresses and amounts owed.
Assignee notifies Creditors within 30 days of execution that assignment has been made, provides an estimate of the probable distribution, and provides a claim form for each Creditor to file a claim in the Assignment estate.
Creditors have 150-180 days from the date of written notice of the assignment to file their claims.
After claim forms are returned and/or the Bar Date has passed, Assignee reconciles the claims and/or objects to any improper claim amounts.
After liquidation, Assignee determines distribution amounts. Claim priority is determined first by state statute, then by Bankruptcy Code. First are secured creditors, then follow tax & wage claims.
Assignee generally informs the IRS that assignment has been made and files notice with local Recorder.
Assignee immediately searches for any previously undisclosed liens (UCC or real estate) to ensure complete notice to all creditors and interest holders.
Assignee secures all assets. In limited situations where the business has enough cash, Assignee may continue to operate the business to maintain going-concern value - if no further debt will be incurred.

It normally takes about 12 months to conclude an ABC.

Effects of ABC

An ABC generally is faster and less costly than a bankruptcy proceeding. Parties can often agree and determine what is going to happen prior to execution of the assignment.

However, ABCs do not discharge individual Assignors from their debts, and do not provide for the reorganization of the business. There is no automatic stay, though in practice an ABC results in an informal and/or incomplete automatic stay if the creditors determine that the assets are beyond their reach.

Creditors are able to continue to pursue the Assignor. ABCs often block judgment creditors from attaching assets because the Assignor no longer has title to or interest in the assigned assets. Sometimes the Assignee is willing to allow the judgment if the judgment creditor submits its claim as described above. The assignee may also defend against a claim if the plaintiff is seeking a judgment which is unjustified and not fair to other creditors.

An ABC also provides grounds for filing an involuntary bankruptcy petition within 120 days of assignment.

The Statutes: California Code of Civil Procedure

§§493.010-493.060 “Effect of Bankruptcy Proceedings and General Assignments for the Benefit of Creditors”

§§1800-1802 “Recovery of Preferences and Exempt Property in an Assignment for the Benefit of Creditors”

A Chapter 11 Reorganization can cost hundreds of thousands of dollars and even a business Chapter 7 Liquidation bankruptcy can easily cost tens of thousands or more. The Assignment method, which pays the Assignee normally by a percentage of the assets sold, is cost-efficient but limited in the protection it may afford the Assignor, as described above. Before this method is attempted, competent legal counsel and certified public accountants should be consulted.

Founded in 1939, our law firm combines the ability to represent clients in domestic or international matters with the personal interaction with clients that is traditional to a long established law firm.

Suspended Counterparty Program

FHFA established the Suspended Counterparty Program to help address the risk to Fannie Mae, Freddie Mac, and the Federal Home Loan Banks (“the regulated entities”) presented by individuals and entities with a history of fraud or other financial misconduct. Under this program, FHFA may issue orders suspending an individual or entity from doing business with the regulated entities.

FHFA maintains a list at this page of each person that is currently suspended under the Suspended Counterparty Program.

This page was last updated on 03/26/2024

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a petition asking the court to approve the ABC and assignee. a copy of the assignment agreement. a list (or "schedule") of assets. a list of creditors and what is owed to each, and. an attestation verifying that the list of assets and creditors are accurate. Typically, the assignee will file this paperwork for you.
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Assignment for the benefit of the creditors (ABC)(also known as general assignment for the benefit of the creditors) is a voluntary alternative to formal bankruptcy proceedings that transfers all of the assets from a debtor to a trust for liquidating and distributing its assets. The trustee will manage the assets to pay off debt to creditors, and if any assets are left over, they will be ...
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Receiverships, ABCs and Bankruptcy: A Comparison

Introduction

Receiverships

Assignment for the Benefit of Creditors (ABC)