Beyond preferences, the assignee has the power to challenge fraudulent transfers — transactions that were made with intent to hinder, delay, or defraud creditors, or that transferred assets for less than reasonably equivalent value while the business was insolvent.
What the Assignee Can Challenge
California’s Uniform Voidable Transactions Act allows the assignee to challenge transfers made within four years of the assignment if: the transfer was made with actual intent to defraud, or the business received less than reasonably equivalent value and was insolvent at the time. Transfers to related parties — family members, related entities, insiders — receive extra scrutiny.
Asset transfers before an ABC are examined carefully. A business owner who transfers equipment to a family member for $1 shortly before making an assignment has created a fraudulent transfer problem. The assignee can sue to recover the equipment or its value. Business owners who are contemplating an ABC should make no unusual asset transfers in the period leading up to it without legal guidance.
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.
California ABC System — Assignment for Benefit of Creditors 
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