Is An Assignment For The 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 an assignment for the benefit of creditors (ABC). Our business attorneys at Aaronson Schantz Beiley P.A., in Miami, Florida, work with each company that they represent on an individual basis, helping each client determine whether an ABC is the best route to take.
Bankruptcy Versus ABC
In the state of Florida, Ch. 727 of the Florida Statutes authorizes the assignment of all assets to a court-supervised fiduciary that our lawyers can help you select for the benefit of the creditors of the company. This option offers business owners a method for liquidating or selling their businesses under state court supervision and authority rather than through the federal bankruptcy court process discussed elsewhere on this website.
In Florida, an ABC is generally equivalent to a Chapter 7 bankruptcy sale. There are, however, various significant differences between bankruptcy and an assignment, which our attorneys will explain to you in detail when you meet with them. By way of highlight, a bankruptcy is usually more costly and time consuming than the procedure associated with an ABC. Additionally, unlike bankruptcy, where trustees are blindly appointed in Chapter 7 cases, the insolvent business is able to select the assignee and streamline the process for a quicker and more predictable outcome. It may even include the continued operation of your business and sale as a going concern.
There are times when going with an ABC makes much more sense than electing to file bankruptcy or engage in any other type of action designed to eliminate the burdens of your business’ debt. A veteran business lawyer will be able to advise you if this is an action that you can and should take.
Making A Decision
First and foremost, always remember that decisions regarding bankruptcy, ABC, restructuring and insolvency, 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 an ABC, one must consider how important the following factors are in their particular 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, such as schedules and court requirements?
- Creditor cooperation: Are you looking for the creditor to agree to terms easily and quickly?
If your answers to the above questions are “yes,” then an ABC may be the best path for you. Below are some questions that clients often ask our attorneys about this topic.
Common Questions And Answers About Assignments For The Benefit Of Creditors
Schedule a consultation to get personalized answers to these and other questions you may have about ABC and your business’s financial troubles.
How long does an ABC take?
From the time of its filing to the settling of all aspects of it, an ABC may take as short a time as 10 days or as long a period as a year for all details to be complete. A knowledgeable business law attorney can help keep the process on track for a timely resolution.
What happens when you liquidate a business?
An ABC allows for a more flexible liquidation than that of a business bankruptcy, according to the American Bar Association. An assignee with appropriate experience will carry out the winding down of the business and liquidate its assets. In some cases, the assignee will be involved before the ABC takes effect, and the ABC will trigger an immediate sale of assets with proceeds to be assigned to creditors.
How will an ABC limit a business owner’s personal exposure?
The assignee named in an ABC takes on a role similar to that of a lien creditor while administering the business’s assets after the filing of an ABC. That person, therefore, has creditor’s rights ahead of other unsecured and secured creditors. This structure protects assignees from extensive personal exposure in most cases.
The statements above are illustrative and general in nature. They may not match your situation precisely. For knowledgeable guidance through the process, discuss the particulars of your case with an attorney before attempting to file an ABC.
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, and ABC. 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 Assistance 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 an assignment for the benefit of creditors (ABC), please contact attorney Steve Beiley at Aaronson Schantz Beiley P.A., in Miami, Florida, by calling 786-600-6940, or contact us by using our short inquiry form to set up an appointment for a free initial consultation.
Our lawyers 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 ABC, our attorneys are competent, knowledgeable and experienced in facilitating business bankruptcies, workouts, assignments, restructuring and liquidation. Make sure you work with an attorney who can help you in a customized manner.
Aaronson Schantz Beiley P.A., is a debt relief agency. We help businesses and individuals file for bankruptcy relief under the Bankruptcy Code.