The 90-day period before an ABC is made is a legally significant window. Payments made to creditors during this period may be recoverable by the assignee as preferential transfers.
What Preference Risk Looks Like
Payments that create preference risk: large lump-sum payments to a single creditor shortly before the assignment, payments to a creditor who was significantly past due (catching up on a long-delayed debt), payments to insiders within one year before the assignment, or any payment made to a creditor who will receive less than full payment in the ABC distribution.
The ordinary course defense protects most routine payments. Businesses that have a consistent payment history and continue that history through the 90-day period have a strong defense. The danger is the unusual payment — the one-time catch-up, the preferential treatment of a favored creditor, or the payment to an insider.
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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