When a funded startup fails, the board almost always lands on the same tool. The ABC’s speed, quiet, and fit with acqui-hire endings made it the venture ecosystem’s default funeral.
What the Law Says
The startup fact pattern maps to the ABC’s strengths: asset value concentrated in IP and team, secured debt limited to a venture-debt lender who cooperates, trade creditors diffuse, and a buyer — often a strategic acquirer or the venture lender’s designee — ready to move at ABC speed with the professional assignees the ecosystem reuses.
How to Navigate It, Step by Step
- Boards: run the fiduciary process — the down-round-to-wind-down record protects directors whom disappointed parties will second-guess.
- Sequence the venture lender early: their consent and credit-bid posture shapes every sale structure.
- Protect the team through the transition: final payroll funded, and the acqui-hire negotiated as part of the asset deal.
- Founders: separate the hats — your fiduciary role, your guarantee exposure, and your next-company plans each get their own counsel conversation.
- Move fast — startup asset value is a melting ice cube measured in engineer-resignation weeks.
Common Questions
Investors want to just abandon the entity and walk away. Why bother with an ABC?
Because abandonment leaves the liabilities, the payroll taxes, and the unwound obligations attached to the people — the ABC is how the ending gets adult supervision.
Can the venture lender end up owning the assets?
Commonly — secured lenders credit-bid or direct sales in ABCs routinely; the process legitimacy protects them and the board alike.
Get the free California ABC Kit at justiceprompt.com — proof of claim templates, creditor monitoring checklists, wind-down planning worksheets, and AI prompts to customize every document to your situation. Free, no email wall. Also available with all ABC resources at assignmentforbenefitofcreditors.org. Educational use only — not legal advice.
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