Lessons From Failed ABCs: What Goes Wrong

Not every ABC goes smoothly. Understanding the common failure modes helps business owners and assignees avoid the mistakes that turn a manageable wind-down into a costly, contentious process.

Common Failure Modes

The most common ABC problems: choosing an inexperienced or conflicted assignee, making preferential payments to favored creditors in the weeks before the assignment, failing to preserve going-concern value by announcing the closure prematurely, having inadequate records for the assignee to work from, and underestimating the time and cost of administration.

The biggest single mistake is waiting too long. Business owners who wait until the business has consumed all cash, alienated key employees, and lost its customer relationships before making an assignment arrive at the ABC with nothing to liquidate. An ABC made while the business still has assets, employees, and customers can produce real creditor recoveries.

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.