ABC ASSIGNEE BANNED
Assignments
Bankruptcy
Contrasted
To
Florida’s Assignment for the
Benefit of Creditors (“ABC”) is often
called a “state bankruptcy.” But, there
are differences between a bankruptcy
and an ABC. In an ABC, the debtor
gets to choose its liquidating agent –
the assignee. In bankruptcy, the debtor
has no authority to choose the trustee.
In an ABC, the assignee often does not
delve with confrontational adversaries
for preferential or fraudulent transfers –
often made to the principal of the debtor.
In bankruptcy, the trustee will often file
actions for preferences or fraudulent
transfers and the Bankruptcy Code
provides greater latitude in the actions
filed on such matters. An ABC often
is much cheaper than a bankruptcy.
Because of these differences, the
Eleventh Circuit determined, “ABCs
and bankruptcies are alternative
proceedings. An entity deliberately
chooses to pursue one or the other.”3
The New Issue
The recent Eleventh Circuit
case addresses a unique issue about
authorization