What is an Assignment for the Benefit of Creditors?

An assignment for the benefit of creditors (also known as an “ABC”) is a formal, voluntary transfer of a business and its assets to a private fiduciary—an Assignee—under the framework provided by Chapter 727 of the Florida Statutes. An Assignee is similar to trustee in a bankruptcy case, with fiduciary duties to all creditors of the assignment estate. In an assignment for the benefit of creditors case, the Assignee works to sell the business’s assets within his business judgment and wind down the businesses in an orderly fashion.  In addition, the Assignee has the ability to pursue certain causes of action. After the business’s assets are liquidated, the assignee will pay the proceeds to the business’s creditors in accordance with their respective priorities after payment of the administrative costs.