Some estates’ best assets are not in the warehouse — they are in the causes of action: the receivables suit, the business tort, the avoidance claims. How assignees monetize litigation determines marginal recoveries.
What the Law Says
Claims transfer with the assignment and monetize three ways: prosecution by the assignee where the economics justify, sale to litigation funders or interested buyers, and settlement against defendants pricing their risk. Avoidance claims — preferences and fraudulent transfers — add estate-created causes to the inherited ones.
How to Navigate It, Step by Step
- Creditors: ensure the claims are scheduled — ask specifically what causes of action the estate holds.
- Push the evaluation: prosecution, sale, or settlement each has a number; the assignee should articulate the comparison.
- Feed the avoidance investigation: what creditors know about pre-ABC transfers is fuel.
- Watch the settlements: releases of valuable claims at soft numbers deserve contemporaneous objection.
- Understand the timeline: litigation assets extend estates — the recovery is worth the patience when the claims are real.
Common Questions
The company had a strong seven-figure claim against a vendor. Will the assignee really try it?
Prosecute, fund, or sell — professionals monetize real claims one way or another; the answer to ask for is which, and why.
Can creditors buy the estate’s claim against someone and pursue it ourselves?
Claim sales to creditors happen — if you hold the knowledge and appetite, the assignee holds a seller’s duty to consider your bid.
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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