Lawyers Assisting Companies in Financial Distress With An Assignment for the Benefit of Creditors

Walking you through the assignment process step by step

An Assignment for the Benefit of Creditors (“ABC”) is often the most efficient and cost-effective method for accomplishing the goals of a business that is in financial distress. The attorneys at Leiderman Shelomith, P.A. have successfully assisted countless struggling companies with this state court procedure. When a business is overwhelmed with debt, it is important to work with a legal team that explores all of the company’s debt relief options. We take pride in fully explaining all debt relief options, so the company can proceed with confidence.

What is an Assignment for the Benefit of Creditors?

An ABC is a state-court procedure that involves the assignment of all of a company’s assets to a third-person, named the “assignee,” who liquidates the property and assets through a variety of methods. The proceeds from the liquidation of the assets are used to pay the company’s creditors. The company making the assignment is called the “assignor”. The ABC process has several similarities to a corporate bankruptcy proceeding, but rather than being governed by federal bankruptcy law, the ABC is governed by Florida law.

What are the advantages of an ABC compared to a corporate bankruptcy?

There are several advantages of an ABC, including:

  • An ABC is typically faster and less costly than a bankruptcy proceeding
  • An ABC generally generates a larger and more expedited recovery for creditors, which is important to a director of an insolvent company who owes a fiduciary duty to creditors
  • An ABC helps ensure the maintenance of professional relationships, which helps the principal of the company who wishes to continue working in the same industry
  • The assignor selects the third-party assignee in an ABC, whereas a Chapter 7 bankruptcy trustee is appointed by the Office of the United States Trustee from an approved panel
  • An ABC provides an orderly liquidation for a company that does not have sufficient cash flow to operate or the ability to obtain financing while in a Chapter 11 bankruptcy
  • Although the “stigma” of bankruptcy is becoming less and less over the years, an ABC avoids the negative connotations that come with a corporate bankruptcy filing
  • An assignee often enjoys greater flexibility and less oversight with respect to selling assets of the company, as opposed to a Chapter 7 bankruptcy trustee, which results in a greater recovery for the creditors

Contact experienced lawyers to discuss how an ABC could benefit your company

Assignments for the Benefit of Creditors law is a highly specialized area of law. The attorneys at Leiderman Shelomith, P.A. have considerable experience representing assignors, assignees, creditors, shareholders, and purchasers of assets in ABC proceedings throughout the Southern District of Florida, including Broward, Miami-Dade, Highlands, Indian River, Martin, Monroe, Okeechobee, Palm Beach, and St. Lucie counties. Contact us at (954) 920-5355 or online to schedule your no-cost consultation.

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