Assignments For The Benefit of Creditors
ABCs Are Quick and Less Expensive
Because there is no court supervision, there is substantial time and money saved when liquidating assets in an assignment for the benefit of creditors. For example, in a piecemeal liquidation, the bankruptcy trustee must expend time and money to employ an auctioneer, obtain approval to pay the auctioneer, obtain approval to incur the expenses to conduct an auction, provide notice to creditors, and other similar matters. This requires both the passage of time and the incurring of administrative expenses, including legal fees.
Additionally, because of delays in a Chapter 7 Bankruptcy, rent expense is incurred due to the continued occupancy of business premises. The rent is paid before the unsecured creditors. Furthermore, unless exceptional circumstances exist, the Assignee is able to commence making cash distributions to creditors within seven to eight months after the General Assignment is commenced. By contrast, a Chapter 7 Bankruptcy Trustee will not commence distributions to creditors until after all assets have been liquidated, administrative processes for the allowance and disallowance of claims has been completed, and he or she is authorized to do so-a process often taking two years or more.
