Assignment for benefit of creditors is also called general assignment, or abbreviated to ABC. It is generally referred to as an alternative to bankruptcy. An ABC involves a company assigning all of its assets to a third party who takes title to the company’s assets in trust, then will sell those assets and distribute the proceeds of the sales to the company’s creditors in priority as determined by Florida State law under 727.114 - pack lunch, it’s a long read. While this might sound like a Chapter 7 liquidation bankruptcy, there are some key differences in how the two processes are conducted and in their end results.
Understanding the language of the law is the first step to understanding the law, and in such a complex profession with such a wide array of terms, it’s easy to feel as if you’re visiting a foreign country just by walking into a courthouse or lawyers office. The term “Assignment for the Benefit of Creditors” or an ABC has been in the news quite a bit lately. From the collapse of Butler and Hosch in mid-May to discount luxury travel site site Luxury Link, and retailer Body Central it seems as if this “bankruptcy alternative” is becoming a mainstream term. So let’s crack it open and have a look at what this term really means.
Few start a business assuming that they are going to fail – and many more keep believing that they aren't until the very last moment of a company. Then, they scramble to find a solution and often find themselves embroiled in a lengthy liquidation process, selling off their assets, paying back debts, and spending months dealing with the fallout – or simply file for bankruptcy and face a gauntlet of legal proceedings.
About Chad Van Horn
Chad T. Van Horn, Esq. is a South Florida business leader and founding partner attorney of Van Horn Law Group, P.A. Through a combination of dedicated philanthropy, spirited entrepreneurship and legal expertise, he applies his resources and network to helping people. Learn more about Chad Van Horn.