An assignment for the benefit of creditors (“ABC”) is a state-law means of business liquidation that, where it makes sense to pursue, usually takes less time and expense than a bankruptcy case. ABCs are available in many, but not all, states. They can involve judges or not, and can be set by statute or common law. An ABC is a trust agreement whereby the owner of a distressed company, the assignor, irrevocably transfers title, custody, and control of (usually all of) its assets to an impartial third party, the assignee, who is a financial professional. The assignee communicates with creditors, initiates claims administration, liquidate the assets, and distributes net proceeds to the beneficiaries of the newly created trust — the assignor’s creditors. To maximize the value of assets distributed to creditors, the assignee may operate the business for a time before selling the assets. An ABC sale of personal property is often done in compliance with personal property foreclosure procedures set forth in Article 9 of the Uniform Commercial Code.
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