California ABC Blog
Assignment for Benefit of Creditors. Business Dissolution. Creditor Rights. California Law.
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ABC Success Stories: What Orderly Wind-Downs Actually Produce
The ABC’s reputation among business professionals is built on real outcomes — cases where an orderly wind-down produced meaningful creditor recoveries and allowed business owners to move on. What Good Outcomes Look Like A successful ABC: pays priority wage claims in full, pays secured creditors their collateral value, produces a meaningful distribution to unsecured creditors,…
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The 90-Day Look-Back: Identifying and Managing Preference Risk Before an ABC
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…
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Using AI Tools to Prepare for an ABC: What Technology Can Help With
Business owners contemplating an ABC can use technology to prepare more efficiently — reducing the cost and time required to get organized before the assignment is made. How Technology Helps Accounting software exports: most accounting platforms can produce complete accounts receivable aging reports, vendor payable lists, and general ledger summaries with a few clicks. Document…
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The ABC and Real Estate Development Companies
Real estate development companies that become insolvent face ABCs of particular complexity. Entitlements, construction loans, partially completed projects, and multi-party development agreements all create issues that require specialized assignee experience. Development Company Issues Key issues include: valuing entitlements (which may have significant value to developers who want to skip the approval process), handling partially completed…
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The ABC and Professional Services Firms: Law Firms, Accounting Firms, and Consultancies
Professional services firms present unique ABC issues: client file obligations, professional licensing constraints on assignment, confidentiality duties, and the challenge of collecting receivables from clients who dispute the quality of services rendered. Professional Services Issues Law firm ABCs face specific professional responsibility rules — client files must be returned or transferred, retainer funds in trust…
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How the ABC Handles Customer Deposits and Prepayments
Customers who paid deposits or prepayments to a business that then makes an ABC face the unpleasant reality that they are unsecured creditors. But the handling of their claims has customer relations and regulatory dimensions that simple trade claims don’t. Customer Deposit Claims Customer deposits and prepayments are unsecured claims in the ABC — customers…
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Key Documents Every ABC Assignee Needs From the Business
The assignee needs specific documents from the business to administer the estate effectively. Preparing these documents before the assignment is executed reduces delays and costs. The Document Checklist Provide the assignee with: corporate formation documents and ownership records, the last three years of tax returns and financial statements, all bank account information and recent statements,…
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ABC vs. Out-of-Court Workout: When Informal Resolution Is Better
Not every financially distressed business needs a formal insolvency proceeding. Sometimes an out-of-court workout — direct negotiation with creditors to restructure or forgive debt — produces a better outcome than either the ABC or bankruptcy. When Workout Makes Sense A workout is appropriate when: there are relatively few creditors (making coordination practical), the business is…
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The ABC in the Technology Sector: What Makes Tech Insolvencies Different
Technology company ABCs have characteristics that distinguish them from retail, manufacturing, or service business ABCs. The asset mix — heavy on intangibles, light on physical property — requires an assignee with sector-specific experience. Tech-Specific Issues Technology ABCs typically involve: source code and software licenses (which require careful handling of third-party dependencies), customer data (subject to…
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What Google and Online Assets Are Worth in an ABC Estate
Many businesses have valuable online assets that traditional liquidation approaches miss entirely. Domain names, social media accounts, email lists, website content, and Google rankings can have real value to the right buyer. Valuing Digital Assets Domain names with strong SEO history or brandable names can sell for thousands to tens of thousands of dollars. Email…
California ABC System — Assignment for Benefit of Creditors 