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. 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

Founding partner Eric Gros-Dubois established EPGD Business Law in 2013. With over a decade of experience expanding the firm and leading it to its current success, Eric now primarily manages the corporate division of EPGD. Given Eric’s educational background, holding both a JD and MBA, combined with his own unique experience of starting a business from scratch and growing it to a multi-million dollar firm, he brings a specialized and invaluable perspective to those seeking legal assistance for themselves and their businesses. Having now instilled his same values in our team of skilled corporate associates, Eric leads a firm that is always ready, willing, and equipped to handle any and every legal matter that a business owner may have.

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