Is Assignment For Benefit Of Creditors A Better Option For Struggling Businesses?
For businesses in Florida that are in financial trouble there are options other than bankruptcy such as assignment for benefit of creditors. The business attorneys at the Aaronson Schantz Beiley P.A. in Miami, Florida, work with each company that they represent on an individual basis, helping each determine if assignment for benefit of creditors, also known as ABCs, is the best route to take.
Bankruptcy Versus ABCs
In the state of Florida, the statute for assignment for benefit of creditors offers businesses a method for liquidating their business under state court supervision rather than through the federal bankruptcy court. This may be done in lieu of bankruptcy.
There are various differences between bankruptcy and assignment for benefit of creditors. A bankruptcy is usually more costly and time consuming than the procedure associated with ABCs. Plus, unlike bankruptcy, the insolvent business controls the timing of ABCs. With assignment for benefit of creditors, the business can take the loss on the date the assignment is executed, which is much earlier than one can with bankruptcy, foreclosure or sale. There’s less red tape too.
There are times when going with ABCs makes much more sense than electing to file bankruptcy or to engage in any other type of action designed to rid your business of debt. A veteran business lawyer will be able to advise you if this is an action that you should take.
How ABCs Works
If your business is undergoing extreme financial difficulties in Florida, then ABCs may be the best choice for you. In Florida, the ABCs are equivalent to a Chapter 7 bankruptcy. However, there is one difference between the two. With ABCs, the assignee, that is the company offering its assets and their entire business to a creditor to pay off their debt, may decide to continue to operate the business for some time. In essence, it is as if the assignee is selling the business as a going concern.
When using assignment for benefit of creditors the state of Florida requires that a company’s assets be assigned to an assignee that the company has chosen. This can lead to a much smoother transaction than one might experience with Chapter 7. With this type of procedure, the assignee must administer the assignment estate for the benefit of creditors.
Making A Decision
First and foremost, always remember that decisions regarding bankruptcy, assignment for benefit of creditors, restructuring and insolvency, trust assignment, and other possible solutions to a company’s inability to pay its debts are dependent on the specific situation and circumstances of the company. There’s a reason why businesses are given various choices when it comes to their inability to pay back debt and remain liquid.
In making a decision concerning ABCs weigh how important these factors are in your situation:
- Timing: Do you want to control when things happen?
- Cost: Are you interested in going a less costly route?
- Simplification: Would you like less red tape?
- Stigma of bankruptcy: Are you concerned about how filing for bankruptcy will affect your reputation?
- Creditor agreement: Are you looking for the creditor to agree to terms easily and quickly?
If your answers to the above questions are “yes,” then assignment for benefit of creditors may be the best path for you.
Looking For The Right Lawyer
First, if your company is experiencing financial distress and is unable to pay its debts, then you want to seek advice from a business lawyer who thoroughly understands and is experienced in a range of options, including bankruptcy, business workouts, restructuring and insolvency, trust assignment, and assignment for benefit of creditors. Your attorney should be able to assess your present situation and review what options are available to you and which ones will be most helpful in alleviating the pressures of mounting debt.
Always look for an attorney who is communicative, who will answer your questions clearly and completely, and who is able to provide you with timely service. Also, a lawyer who is a savvy negotiator can be a major help in dealing with creditors.
Get Help Now
It is always better to seek help sooner than later. Thus, if your business is experiencing financial distress due to mounting debt and you have questions regarding the process and practicality of assignment for benefit of creditors, contact the Aaronson Schantz Beiley P.A. in Miami, Florida, by calling 786-600-6940 or contact us by using the short form on this website to set up an appointment for an initial, free consultation.
One of our business attorneys will review your situation, offer you an assessment of your possible choices, and help you begin the process of dealing with creditors and unpaid debt. Besides ABCs, the lawyers at Aaronson Schantz Beiley P.A. are competent, knowledgeable and experienced in facilitating business bankruptcies, workouts, trust assignments, and restructuring and insolvency. Make sure you work with an attorney who can help you in the manner that will best benefit you.