We at DEMARCO•MITCHELL, PLLC would like to take a moment to discuss one bankruptcy alternative. Assignment for Benefit of Creditors, or ABC, is the voluntary transfer of property and legal title by a debtor (Assignor, and Transferor) to a third party (Assignee); where the third party liquidates said property in order to meet a debt obliged to a creditor or creditors. The Assignor is given any surplus money should liquidation yield funds greater than debts owed to creditors. While anyone can file for an ABC, it is rare that an Assignee will accept an individual debtor as an Assignor. However, an ABC can be an ideal solution for certain corporate entities facing insolvency.
There are a few forms ABC may take; such as: General Assignment, Partial Assignment, or Special Assignment.
In a general assignment, the assignor turns over all property to the assignee for liquidation in order to meet obligations to all creditors. Whereas a partial assignment is an iteration where only a portion of the assignors property is transfered to the assignee for the benefit of all creditors. A special assignment differs from the previous assignments in that specificied creditors benefit from the liquidation of assets. An Assignment for Benefit of Creditors may not clear the assignor of debts obligated to creditors. The assignor is liable for the amount owed to a creditor or creditors, should the debt prevail after liquidation.
This is by no means an exhaustive definition of Assignment for Benefit of Creditors; and state statutes may vary. If you are an individual debtor or small business debtor considering bankruptcy, contact DEMARCO•MITCHELL, PLLC in Plano, Texas. Our experienced, Plano TX bankruptcy attorneys will provide a free consultation and handle your case with the diligence and personal attention you deserve. Contact our attorneys online, or call us today at (972) 578-1400.