Information Nation recently spoke with Arthur van der Vant, Illinois Receiver,about a process known as ABC – the Assignment of Benefit of Creditors. He says this is a great alternative to bankruptcy for those looking to keep things low-key but who must liquidate assets in order to pay creditors. In this exclusive interview, Arthur van der Vant opens up about his role as an ABC assignee.
Information Nation: Thank you, Arthur van der Vant, for speaking with us today. We are glad you are here.
Arthur van der Vant:No problem, I’m always happy to educate people on alternative proceedings.
Information Nation:Let’s get started. Why would a business not just file for bankruptcy?
Arthur van der Vant:Well, Chapter 11 bankruptcies may make sense but they are complicated and can be cost prohibitive. Chapter 7 bankruptcies do not allow for continuation of operation of the business after filing.
Information Nation:So business bankruptcy filing may be a lengthy and damaging process, at the end of which everybody loses–debtors and creditors alike, right?
Arthur van der Vant:Yes, that is right.
Information Nation:How does this process work?
Arthur van der Vant:Assignments for the Benefit of Creditors (ABC) under the Illinois Common Lawis a voluntary transfer of all, or substantially most, assets of a business to an Assignee in trust by a corporation, an LLC, or a partnership to be liquidated and proceeds to be applied to the payment of debt and to return any surplus to the debtor.
Information Nation:Is this similar to appointing a trustee in bankruptcy?
Arthur van der Vant:Yes, very much like that.
Information Nation:So, Arthur van der Vant,an ABC assignee is given the responsibility of administrating the debtor’s assets and distributing proceeds to creditors?
Arthur van der Vant:Yes, that’s right.
Information Nation:Bankruptcies are conducted in court. What about ABC?
Arthur van der Vant:It depends on the state law.In the State Illinois where I practice the assignee is chosen by the debtor and acts out-of-court based on the assignment agreement.
Information Nation:Does an ABC appear on a credit report?
Arthur van der Vant:No, it does not.
Information Nation:Arthur van der Vant, can you tell us any other benefits of this process?
Arthur van der Vant:ABC process is cost effective, takes less time, and usually produces greater return to creditors.
Information Nation:How much power does the assignee have?
Arthur van der Vant:Once the assignment is made and accepted, the assignee takes control and management of the Debtor’s assets and has all decision making over the affairs of the Debtor, including over the Board of Directors.
Information Nation:Are there any limitations, Arthur van der Vant?
Arthur van der Vant:The decision to close a business and to make the assignment for benefit of creditors requires approval of the Board of Directors. In the case of an LLC the members of the limited liability company must approve such a decision. In addition to that, a majority of shareholders of a company must also approve the Board of Director’s decision.
Information Nation:That is all very interesting. Thank you, Arthur van der Vant, for speaking with us and look forward to more time with you in the future.
Arthur van der Vant: My pleasure.
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