ASSIGNMENT FOR THE BENEFIT OF CREDITORS
An ABC is a mechanism used to monetize the assets of a business under state law. It commences with the execution of a “Deed of Assignment,” between a representative of the company in which all corporate assets are transferred to an “assignee.” The assignee, in accordance with the Deed, must monetize the assets of the business and distribute the proceeds to creditors. In certain states, including Georgia, ABCs do not require court action or supervision. In other states, such as New York, ABCs are statutory and require court supervision.
Some Advantages of an ABC:
- An ABC can be achieved very quickly and with lower expense than a bankruptcy proceeding, increasing proceeds available to stakeholders
- The troubled company chooses the assignee who will maximize recovery and has experience marketing similar assets
- An assignee often sells the assets of the business as a going concern and can operate the business prior to a sale.
- An ABC is an effective method to communicate with creditors and other stakeholders in the closing of a business.