Assignment for the Benefit of Creditors

When a business is unfortunately forced to shut down due to debt, there are a variety of paths that can be taken to wind up the business. While bankruptcy is a well-known approach, businesses have another option known as the Assignment for the Benefit of Creditors.

What is an Assignment for the Benefit of Creditors?

An Assignment for the Benefit of Creditors, commonly referred to as ABC, is an alternative to bankruptcy in which the business turns over its assets to creditors. An ABC is similar in many ways to bankruptcy but is often a cheaper and faster process. Additionally, an ABC permits the liquidating business to retain more control over the process than it would in a bankruptcy. Specifically, the liquidating business selects the assignee to oversee the process.

How does the Assignment for the Benefit of Creditors Process work?

In Florida, an ABC process is governed by statutes §§ 727.101-727.117. First, the business that wishes to liquidate its assets, selects an assignee to act in a capacity similar to a bankruptcy trustee. This assignee is typically a professional, such as a lawyer or accountant, familiar with the ABC process. Once an assignee is selected, an Assignment document containing, amongst other things, a list of creditors and the debtor’s assets is filed with the clerk of court in which the debtor is located. Once the Assignment is file, the assignee must file notice of the Assignment by publication in a newspaper once a week for four consecutive weeks. Additionally, the assignee must mail notice to all known creditors within twenty days after filing the Assignment petition. Like the trustee in bankruptcy, the assignee then is responsible for liquidating the business assets and distributing them to creditors. The statutes outline the order for distributing assets and various procedures the assignee must follow.

Overall, the Assignment for the Benefit of Creditors process is a faster and quicker way for businesses to wind-down their business without the stigma of bankruptcy.

EPGD Business Law is located in beautiful Coral Gables, West Palm Beach and historic Washington D.C. Call us at (786) 837-6787, or contact us through the website to schedule a consultation.

*Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns. Contacting us through our website does not establish an attorney-client relationship.*

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Eric Gros-Dubois

Eric P. Gros-Dubois founded EPGD Business Law in 2013 and is the current head of the firm’s corporate, estate planning, and tax practice, and manages the firm’s Washington D.C. office. With a JD and MBA, and a specialization in finance, Eric is able to step back and view the legal world through a commercial lens while also acting as a trusted business advisor for his clients. He does his best to be solutions oriented, and tries to think like a business owner, not just a lawyer.


*The following comments are not intended to be treated as legal advice. The answer to your question is limited to the basic facts presented. Additional details may heavily alter our assessment and change the answer provided. For a more thorough review of your question please contact our office for a consultation.

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