The Uniform Assignment for Benefit of Creditors (ABC) Act seeks to modernize and standardize a debtor-initiated, state-law liquidation mechanism commonly known as a general assignment for the benefit of creditors (ABC). In an ABC, a financially distressed debtor (the "assignor") voluntarily transfers all its assignable assets to an independent fiduciary (the "assignee"), who collects, liquidates, and, in appropriate circumstances, temporarily operates the business and distributes proceeds to creditors.
Today, state ABC statutes, if they exist at all, vary significantly. Some states, such as Illinois, lean on common law to regulate the ABC process, while others, such as Delaware, provide for a more rigid in-court process regulated by an aged statute. Many states, some of which have frustratingly underdeveloped ABC law, exist in the middle with varying degrees of court oversight, disclosure and notice requirements, powers and duties of assignors and assignees, and wind-down requirements to close the ABC.
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