An Assignment for the Benefit of Creditors (ABC) is a state law alternative to chapter 7 bankruptcy, chapter 11 bankruptcy, receivership, composition, or dissolution.
In “Assignments for the Benefit of Creditors: Simple as ABC?” Robert L. Eisenbach III provides a brief and clear summary of Assignment for the Benefit of Creditors (ABC) procedures. He illustrates the process usefully with a hypothetical scenario of a cash-negative company with insufficient money to fund further operations and no likely prospects for credit, and which has specific technology assets that a chapter 7 trustee might not liquidate efficiently. This latter consideration may be particularly important for any guarantor of the failing company’s debt.
Eisenbach notes that there are differences among states, and he applies the California statutory ABC to his hypothetical scenario. To learn about the alternatives is to empower yourself for optimal action when trouble comes.
For a case study under Illinois’s common law ABC process, read The Road to an Assignment for the Benefit of Creditors (ABC): A Case Study. For a 50-state survey of ABC procedures, plus receiverships, compositions, and workouts, see Strategic Alternatives for and Against Distressed Businesses (Jonathan Friedland, et al. 2022-2023 edition). Geoffrey Berman’s manual, General Assignments for the Benefit of Creditors: The ABCs of ABCs, also gives an excellent overview of ABCs. It provides a more extensive overview than the articles previously mentioned, but is shorter and more cost-effective than the full book.
Additionally, Russell C. Silberglied’s article Determining Whether or Not to Seek Court Approval of a Sale in a Delaware Assignment for the Benefit of Creditors Case analyzes the ABC process in Delaware and what factors regarding their court procedures should be considered when deciding to engage in an ABC.
This is an updated version of an article originally published on March 11, 2015]
©2022. DailyDACTM, LLC d/b/a/ Financial PoiseTM. This article is subject to the disclaimers found here.
The editors and editorial board of DailyDAC include preeminent restructuring and insolvency professionals, journalists, and editors. They are devoted to providing reliable and plain English education and deal intelligence about assignments, corporate bankruptcy, receiverships, out-of-court workouts and similar topics.
PUBLIC NOTICE OF ABC SALE: Confidential Furniture Rental Company
Selling Distressed Assets: The Assignment for the Benefit of Creditors Alternative
Determining Whether or Not to Seek Court Approval of a Sale in a Delaware Assignment for the Benefit of Creditors Case
Dealing with Corporate Distress 18: Buying & Selling Distressed Businesses
The Road to an Assignment for the Benefit of Creditors (ABC): A Case Study
Dealing with Corporate Distress 10: All About “Claims” Outside Bankruptcy
Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page.