California ABC Blog
Assignment for Benefit of Creditors. Business Dissolution. Creditor Rights. California Law.
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The ABC and Franchise Businesses: Special Considerations
Franchise businesses that become insolvent face an extra layer of complexity in an ABC: the franchisor. The franchise agreement almost certainly contains provisions addressing what happens on insolvency, and the franchisor has rights that affect how the assignment proceeds. Franchise Agreement Issues Most franchise agreements: prohibit assignment without the franchisor’s consent, give the franchisor termination…
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Creditor Committees in an ABC: When They Form and What They Do
In large or complex ABCs, creditors sometimes form an informal creditor committee to monitor the assignee’s administration. Unlike bankruptcy, there is no formal committee appointment process — but committees form organically when stakes are high enough. How Creditor Committees Work in ABCs An ABC creditor committee is informal — there is no court order establishing…
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The ABC as a Tool for Controlled Business Wind-Down After a Partnership Dispute
Business partnerships that dissolve acrimoniously sometimes end in an ABC — particularly when partners disagree about how to wind down operations and neither side trusts the other to manage assets fairly. An independent assignee resolves this problem. Why an ABC Works for Disputed Wind-Downs When partners can’t agree on who controls the wind-down, an ABC…
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California UCC Filings: How to Check Liens Before Making an ABC
Before an ABC is made, a thorough search of UCC filings against the business is essential. This search reveals which creditors claim security interests in business assets — information that shapes the entire distribution analysis. How to Search UCC Filings California UCC financing statements are searchable through the California Secretary of State’s online database. Search…
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The SBA Loan and the ABC: What Happens to Federal Guarantees
Many small businesses carry SBA loans — loans backed by the federal government that almost always include a personal guarantee from the business owner. When a business makes an ABC, the SBA loan creates specific issues that require careful handling. The SBA’s Role in an ABC The SBA, through the lending bank, is typically a…
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Due Diligence for ABC Buyers: What to Look for When Buying Assets From an Estate
ABCs are a source of acquisition opportunities. Buyers who understand how to conduct due diligence on ABC assets — and how to move quickly in a competitive process — can acquire valuable assets at distressed prices. The Due Diligence Process When buying from an ABC estate, investigate: title to all assets, any liens or encumbrances…
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Finding the Right Attorney to Guide Your ABC Process
While an ABC can be initiated without an attorney, most business owners benefit from legal guidance — particularly on the decision between ABC and bankruptcy, the selection of an assignee, and the structure of the Assignment Deed. What an ABC Attorney Does An ABC attorney advises on: whether the ABC is appropriate given the business’s…
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The ABC Closing: Final Accounting, Final Distribution, and What Comes Next
Every ABC eventually closes. The closing process involves a final accounting of all receipts and disbursements, a final distribution to creditors, and formal termination of the assignment. The Final Steps Before closing, the assignee: prepares a final accounting showing all assets received, all expenses paid, and all distributions made; provides creditors with a copy and…
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Post-ABC: What the Business Owner Can and Cannot Do After the Assignment
Once the Assignment Deed is recorded and the assignee takes over, the business owner’s role in the former business is essentially over. Understanding what they can and cannot do prevents missteps that could create liability. What Changes for the Owner After the assignment: the owner no longer controls business assets, cannot make payments from business…
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The ABC and Disputed Secured Claims: When Lien Validity Is Contested
Not every creditor who claims a security interest actually has a valid, perfected lien. In some ABCs, the most important work the assignee does is verifying which security interests are legally enforceable. How Lien Validity Is Analyzed The assignee reviews each claimed security interest and verifies: whether a UCC financing statement was properly filed and…
California ABC System — Assignment for Benefit of Creditors 