Santa Monica The Assignment for Benefit of Creditors Lawyer

In California, where assignments for the benefits of creditors ("ABC") is a longstanding legal option, the primary governing law is found in California Code of Civil Procedure sections 493.010 to 493.060 and sections 1800 to 1802, among other provisions of California law. However, not very many law firms are familiar with this process that can be extremely useful for businesses that are struggling economically.

The Santa Monica assignment for benefit of creditors assistance attorneys at Weintraub & Selth not only have extensive experience in helping businesses utilize this form of debt relief, we can also help you with any other business restructuring you may need to help booster your business and make it more profitable. For more information about our services, please do not hesitate to contact us today.

Unlike traditional bankruptcy proceedings, an ABC is an insolvency proceeding governed by California state law rather than the federal Bankruptcy Code. Most corporations, unless the bylaws say otherwise, do require both board and shareholder approval for an ABC because it involves the transfer to the assignee of substantially all of the corporation's assets. This is why ABC's are a great option for closely-held corporations and other small businesses, but not ideal for publicly held companies.

The Role of the Assignee: Who They Are, What They Do, How We Help

In California, the company and the assignee enter into a formal "assignment agreement." Unlike a Chapter 7 bankruptcy trustee, who is randomly appointed from those on an approved panel by the bankruptcy court, a corporation making an assignment is generally able to choose the assignee. The assignee becomes a fiduciary to the creditors and is typically a professional liquidator. We can help you select an assignee who you know and we will work with to make sure they fulfill all their duties properly.

We can also help you negotiate with the assignee when it comes to his or her fees. This includes the upfront fee they are traditionally paid for becoming the assignee of your company that if paid by a shareholder or officer personally, can be reimbursed once cash flow has been restored to the company. We can also help you negotiate the ongoing fees that may be paid to assignee.

Your company must also provide the assignee with a list of creditors, equity holders, and other interested parties (names, addresses, and claim amounts). The assignee is required to give notice to creditors that they are the assignee who will be in charge of all transactions with them. The assignee is also in charge of setting a bar date for filing claims with them that is between five to six months later.

Although you cannot deviate from this type of plan, there is no oversight by a court, like when a company files for bankruptcy. This means there is more flexibility when it comes to how these transactions are structured and you can keep these dealings private because you are not required to to make a public court filing that an ABC is taking place. To learn more about what happens when an ABC takes place and the laws that guide ABC proceedings, please see our additional pages on assignment for the benefit of creditors.

Orange County Trust Law Attorney Guiding You Through the ABC Process

For more information: To discuss assignment for the benefit of creditors with one of our Los Angeles lawyers, call 310-584-7702, 866-572-2423 (toll free) or complete the contact form on this Web site. Se habla español.