ABC State Form of Liquidation

Assignment for the Benefit of Creditors in Fort Lauderdale

If your company is struggling to stay afloat due to mounting levels of debt, you may be considering bankruptcy, a federally governed method of reorganizing and discharging debt. Florida, however, offers an alternative to bankruptcy: Assignments for the Benefit of Creditors (ABC). Depending on your unique circumstances, this state court procedure may be a more efficient and cost-effective method of liquidating assets and, ultimately, achieving your financial goals.

LSS Law has over 70 years of combined legal experience, and we have helped countless clients turn their businesses around with procedures like the ABC. If this option is right for you, we can provide both counsel and representation at every step of the process, advocating for your best interests along the way.

The ABC Liquidation Process

In an ABC, an assignee assesses your company’s financial affairs and liquidates your company’s assets. The assignee then takes the proceeds from this liquidation and pays your company’s creditors. You can then claim any remaining proceeds.
Unlike bankruptcy, the ABC liquidation process does not order an automatic stay of collection attempts, and it doesn’t allow companies to discharge debt. However, the assignee is one of the major reasons businesses choose an ABC over bankruptcy. Your company, with our guidance and support, selects a professional assignee with years of experience liquidating assets and running businesses. Through this process, you can maintain a level of involvement you wouldn’t experience during bankruptcy.
Prior to the commencement of the assignment process, our team at LSS Law will spend a significant amount of time with your company’s principals.

The Preparation Process

Conduct extensive due diligence
Vet your company’s various assets
Assess your company’s liabilities (even those that may not have matured)
Predict what issues may arise in the assignment procedure
Determine whether you can achieve your strategic objectives through the ABC

If we conclude the ABC is still the most appropriate strategy for your goals, we will facilitate meetings and discussions with potential assignees. Once you select your assignee, and the assignee agrees, our team will draft the schedules and document the assignment. During this process, we will maintain ongoing communication with the prospective assignee to determine and implement optimal timing.

The assignee will assess your company’s financial affairs and determine whether it is owed any assets or funds. Within 30 days of commencement, the assignee will conduct the deposition of the company’s key principal. In other words, we will transfer ownership and control of your business’ estate to the assignee. LSS Law will assist you during this process to ensure it goes as smoothly and efficiently as possible.

An Alternative to the ABC: Chapter 7 Liquidation

If our team concludes the ABC process is not right for your business, we may recommend liquidation through Chapter 7 bankruptcy instead. While you retain less control and involvement, you may be able to discharge outstanding debt after the liquidation process.

During Chapter 7 bankruptcy, your business stops operating, and the trustee conducts an orderly liquidation of assets to pay your company’s creditors. Because Chapter 7 does not recognize exemptions (unlike Chapter 13), all of your company’s property and assets will be liquidated to pay the creditors. When the proceeds have paid all possible contracts, utility bills, lease obligations, loans, credit cards, and other business debts, your business is no longer liable for any of its debts. You and any other business owners are also released from liability unless you are personally liable for the debts through a contract.

You May Consider Chapter 7 Liquidation if Your Business:

Wants to cease operations and have an organized means for liquidating assets
Is a defendant in multiple lawsuits
Has liabilities that exceed its assets
Is renting space and needs relief from an onerous lease
Would like to sell its assets free of any and all claims
Needs relief from burdensome contracts

We May Also Recommend Chapter 11:

Although Chapter 7 bankruptcy is the most common method for individuals in need of financial relief, some individuals may benefit from Chapter 11 instead. Businesses, on the other hand, often resort to Chapter 11 bankruptcy because it allows them to resolve large debts without adhering to a strict plan (as is the case with Chapter 13 bankruptcy).

The business may continue to operate while Chapter 11 bankruptcy takes effect.
The filer has the power to propose a reorganization plan for unsecured debts.
The judge can order creditors to stop calling and harassing the filer once the bankruptcy process begins.
The Small Business Reorganization Act of 2019.

The benefits of Chapter 11 bankruptcy include:

Take the First Steps Toward Debt Relief Today

The ABC state procedure is a highly specialized area of law. Our team has substantial experience representing not just assignors but also assignees, creditors, shareholders, and purchasers of assets in Florida ABC proceedings. We have a thorough understanding of each party’s role, responsibilities, and motivations, and we use this perspective to inform our counsel and representation. If the ABC process is not right for you, we can recommend other solutions, like Chapter 7 bankruptcy for business, to help you accomplish your financial goals.

Schedule Your Strategy Session with LSS Law

At LSS Law, we value our relationship with you. You are not just a case or a file number, but a person we truly want to help. We assist businesses throughout Florida, including the counties of Broward, Miami-Dade, Highlands, Indian River, Martin, Monroe, Okeechobee, Palm Beach, and St. Lucie. Let us help you obtain the debt relief you want and provide a brighter financial future.

If you want to learn more about ABC State Form of Liquidation, please contact us online or call (954) 866-5356.