The ABC resolves the business entity’s obligations — but it does not eliminate a business owner’s personal guarantees. Understanding this before making the assignment is essential for realistic planning.
Which Debts Have Guarantees
Business loans from banks almost always require personal guarantees. SBA loans require them as a matter of policy. Commercial leases frequently include personal guarantee provisions. After the ABC closes, guaranteed creditors who received less than 100 cents on the dollar will pursue the owner personally for the deficiency.
The ABC can actually help with personal guarantee exposure. An orderly ABC that maximizes creditor recoveries reduces the deficiency balance on guaranteed debts. A business that closes chaotically leaves larger deficiencies that the owner must face personally. The ABC is a tool for managing the total liability picture, not just the business debt.
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. Request your free evaluation here.
California ABC System — Assignment for Benefit of Creditors 
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