Arthur van der Vant Interview: Assignment of Benefit for Creditors
Arthur van der Vant
Recently, Arthur van der Vant spoke with CommunityBlogOnline about a process known as the Assignment for Benefit of Creditors, or ABC, and how it may help a business continue to operate when facing serious debt.
CommunityBlogOnline: Thank you, Arthur van der Vant, for speaking with us today.
Arthur van der Vant:It is certainly my pleasure.
CommunityBlogOnline: Let’s get started, shall we? We know you’re outspoken in saying that an ABC assignment is more beneficial to a business than filing bankruptcy. But, can you tell us what exactly an assignee does?
Arthur van der Vant:The Assignee has many duties that may include investigating the assets of the debtor to determine their values; providing for an orderly liquidation of assets of the debtor; collecting Accounts Receivable and other debts owed to the debtor; or investigating any causes of action that may be available to the debtor’s estate that could generate additional funds for the estate.
CommunityBlogOnline:That sounds like a lot of responsibility.
Arthur van der Vant: Yes, it is. As the Assignee, one must investigate the prior acts and conduct of the debtor to determine that the Assignment for the Benefit of Creditors was made in good faith and that the assets of the business were not embezzled or otherwise reduced by the company’s owners or officers in an effort to defraud creditors.
CommunityBlogOnline:What about the debtor’s responsibilities?
Arthur van der Vant:It is similar to the duties imposed upon a debtor under the Bankruptcy Code.
CommunityBlogOnline:Can you elaborate, Arthur van der Vant?
Arthur van der Vant:Some of the duties of the debtor (Assignor in ABC) include assisting the assignee in the administration of the estate, delivering the assignee all the assets of the estate, and disclosing and submitting all the assignee’s financial records for examination.
CommunityBlogOnline:Does the assignee own the property?
Arthur van der Vant:Yes, but it depends on the state law. Under the Uniform Commercial Code §9-309 the Assignee will have a perfected lien on assets as of the date of the assignment, junior to any existing secured claims.
CommunityBlogOnline:Does placing a company in ABC stop other unsecured creditors?
Arthur van der Vant:The perfected lien recognition limits unsecured creditors’ ability to enforce a judgment (or pre-judgment writ) obtained after the assignment as they would be junior to the lien right of the assignee.
CommunityBlogOnline:And what about secured creditors who are in place ahead of the ABC?
Arthur van der Vant:Senior secured creditors’ rights are not affected by Assignee’s lien rights and they retain their right to their collateral after the assignment.
CommunityBlogOnline:Can the assignee liquidate the secured creditor’s collateral?
Arthur van der Vant:The assignee must first obtain the senior secured creditors’ consent.
CommunityBlogOnline:If the subject property or businesses is liquidated, what are the terms, Arthur van der Vant?
Arthur van der Vant:Assignee’s sales are on an “as is – where is” basis, without representation or warranty, other than the seller’s Assignee has the authority to enter into the sale and to deliver the acquired assets.
CommunityBlogOnline:Are there any creditors that take priority over others?
Arthur van der Vant:Yes, claims of any federal government agency have priority over all unsecured claims.
CommunityBlogOnline:That makes perfect sense. Unfortunately, this is all the time we have for today. We look forward to speaking with you again in the near future.
Arthur van der Vant: My pleasure.
The data contained in this publication is provided by Arthur van der Vant for information purpose only. The accuracy of the data contained herein is deemed reliable, but is not guarantied. Arthur van der Vant and/or publisher do not engage in rendering legal, accounting, or any other professional advice, and suggests that the services of a professional in those fields should be sought. Any liability, loss, or risk, personal, or otherwise incurred as a result of using any of the information herein stated is not the responsibility of the Arthur van der Vant and/or publisher. For more information, visit http://www.IllinoisReceiver.com