Most states have adopted statutes that govern endowments for the benefit of creditors. In some states, it should be foreseen that an assignment must or must not comply with legal requirements, while in others, the debtor may make a common transfer governed by the common law or a legal assignment governed by the laws in force. The abc process is initiated by the troubled entity (adjudicator entity) which enters into an agreement with the party responsible for the liquidation and/or liquidation or sale of businesses (agents) as a fiduciary status for the benefit of the sovereign`s creditors. The transfer agreement is a contract under which the assignee transfers the fullty of his right, property, interest and retention and control to the fiduciary third party. The assignee liquidates the property and distributes the proceeds to the assignee`s creditors. The agent pays a dividend at the end of the assignment process. The dividend is the result of the sale of assets, debt collection, asset recovery and cash. Some creditors may or may not receive a dividend. The assignee hopes to allow a withdrawal to one of the creditor`s receivables; However, it depends on the amount of cash an agent can make in the liquidation process.
[Citation required] n. a method used for a debtor to establish a payment plan to his creditors through an agent who regularly receives a portion of the debtor`s income to pay the debtor`s bills. The transfer of common law by simple transfer of trust is, in many cases, a superior liquidation mechanism compared to the heavier legal procedures that govern a formal chapter 7 liquidation case or a Chapter 11 liquidation procedure. Compared to the liquidation of bankruptcy, contracts can be less bureaucratic and constitute a much faster and more flexible liquidation process. In addition, unlike a Chapter 7 liquidation, where the management of the liquidation process is normally entrusted to an unknown agent, the assignee may choose, in an ABC, an assignee with the experience and expertise necessary to proceed with the liquidation of his activities and the liquidation of his assets. In pre-packaged ABCs for which an immediate business sale is made, the agent is included before the CBA comes into effect. In addition, judicial proceedings, requirements and control are not concerned in states that have adopted the ABC common law procedure. On the other hand, in the event of bankruptcy, the legal process is sought and entails additional uncertainties and complications, including players whose identity is unknown at the time of filing the insolvency application, likely costs and delays. The creditor`s claims order generally follows the normal bankruptcy decision imposed by a Chapter 7 bankruptcy, generally guaranteed and unsecured in descending order.
The agent may, under state law, use Chapter 7, Title 11, the U.S. Code if necessary.