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Assignment for the Benefit of Creditors

Assignment for the Benefit of Creditors is a state court procedure that has many benefits over a corporate chapter 7 bankruptcy.  A small business with no assets often does not need any court procedures and can just shut the doors.  A business with substantial assets may want to have a proper method of winding down the business.  If the company files a chapter 7, an independent bankruptcy  trustee will liquidate the assets.  The chapter 7 trustee will also thoroughly analyze possible transfers of assets to friendly creditors or to the owners of the business.  In an assignment for the benefit of creditors (ABC), the debtor company makes an agreement and selects the company who is going to liquidate the business assets.   The assets of the company are actually transferred to the liquidator. Additionally, the liquidator might need to pay for some time the principals of the debtor to assist…
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