ABCs Create A Trust for the Benefit of Creditors

The Assignee for the Benefit of Creditors is the functional equivalent of a Chapter 7 Bankruptcy Trustee. Once the transfer of the assets by the Assignor (the transferring entity) pursuant to the ABC occurs, the Assignee holds the assets for the benefit of all of the Assignor’s creditors. Because the Assignee acts as a fiduciary for the benefit of the Assignor’s creditors, the assets are held in trust and the creditors are the beneficiaries of the trust. Because of this special fiduciary relationship, Equitable Transitions, Inc. maintains fiduciary insurance to provide an added level of confidence that creditors will receive the benefit the process intends to provide to them. Because the assets are held in trust, Equitable Transitions, Inc., as Assignee, holds itself to the highest standards of honesty in the use and disposition of the assets and any money received from their liquidation. To this end, all fees and expenses are discussed and agreed upon as a precondition to both the making of the ABC and Equitable Transitions, Inc.’s acceptance of the ABC.

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