An Assignment for the Benefit of Creditors (“ABC”) is often the best alternative for organizations facing business bankruptcy. ABCs can be faster, cost less, and net a better result for everyone involved.
While Assignments for the Benefit of Creditors function similarly to a Chapter 7 Bankruptcy, they frequently present a better alternative to business bankruptcy.
- Faster — Once the assessment is complete and a decision has been made, an Assignment can be made in one day, quickly relieving business owners of much of the stress and worry associated with business bankruptcy.
- Less Expensive — Overall costs are often far less.
- Private — It’s now the Assignee who handles communications and debt payments, while the business owner exits quietly.
- Greater Flexibility and Control — Equitable Transitions can make business decisions in the best interest of the Assignment Estate, WITHOUT waiting for court approval.
- Better Results — Because the process is faster and simpler, the net result is generally better for all sides. Creditors receive payments more quickly, and debtors are relieved of the strain of meeting impossible obligations while getting personally ensnared in frustrating legalistic proceedings.
The executives at Equitable Transitions are recognized professionals at Assignments for the Benefit of Creditors, with decades of successful outcomes. How do ABCs work?
Generally, Assignments for the Benefit of Creditors require a transfer of all of the struggling company’s transferable assets to a third-party fiduciary (called an Assignee), like Equitable Transitions, Inc. for the benefit of all the transferring entity’s creditors.
By the use of an ABC, the transferring entity’s assets are liquidated by the Assignee for the benefit of all creditors of the transferring entity. Creditors of the transferring entity are given notice of the ABC and, by statute, are given up to six months to submit claims with the Assignee. Creditors who fail to submit claims to the Assignee have no right to participate in the distribution of the cash proceeds received from the liquidation of the assets.
Why are Assignments for the benefit of creditors so often preferred?
- They are quick and less expensive
- They provide greater flexibility in maximizing the value of assets
- They create a trust for the benefit of creditors
- They provide for a process in which secured debt can be resolved
- They help to relieve business owners of the personal anxiety and public exposure of dealing with business bankruptcy