What Is an Assignment for Benefit of Creditors — and Why Most Business Owners Never Hear About It

When a California business becomes insolvent, most owners think they have two choices: bankruptcy or closing the doors. There is a third option that attorneys have used for decades — one that is faster, cheaper, and less public than federal bankruptcy. It’s called an Assignment for Benefit of Creditors, or ABC.

The Basic Structure

In an ABC, the business owner voluntarily transfers all business assets to an independent professional called an assignee. The assignee liquidates those assets, pays creditors in the legally required priority order, and winds down the business. The whole process typically takes months, not years, and occurs entirely outside federal bankruptcy court.

The ABC is California’s best-kept insolvency secret. It doesn’t appear on federal court dockets. It doesn’t trigger the automatic publicity of a bankruptcy filing. For business owners who want to wind down professionally and preserve relationships with creditors and employees, it’s often the right answer — and most never know it exists.

The California ABC System gives business owners and creditors the exact tools, templates, and step-by-step guidance to navigate an Assignment for Benefit of Creditors — faster and cheaper than bankruptcy, without a federal court filing. Request your free evaluation here.