The Evolution of ABCs: Opportunities to Acquire Distressed Companies Outside of Bankruptcy

What is an Assignment for the Benefit of Creditors (ABC), and what kinds of companies are best positioned to make use of this out-of-court restructuring alternative?

Harold Israel recently joined a panel of experts including Bryn Perna, senior vice president at Wintrust Bank; Jeff Klausner, co-founder of Resolution Financial Advisors; Christopher Ward, partner at Lowenstein Sandler; and moderator Alex Kasdan, founding partner of Convergence, to discuss the ABC process, the advantages of choosing ABC over bankruptcy, and more. Click the links below to view specific topics in the conversation, or watch the full discussion here.

• What is an Assignment for the Benefit of Creditors (ABC)?
• Why would a company choose an ABC instead of the traditional bankruptcy process that more people are more familiar with?
• ABCs have evolved in recent years into much larger and more complex transactions. Why have ABCs become more common?
• From the lender’s perspective, when do ABCs make the most sense?
• How do you address the successor liability risk in an ABC?
• There are states in which ABCs are a court process. Do those jurisdictions offer greater protections against liability?
• What are the risks for a banker or financial advisor working on an ABC?
• Other than avoiding the expense associated with traditional bankruptcy, why does a lender consent to an ABC?
• If a company has assets across multiple jurisdictions, where should the ABC take place?
• When acquiring an entity, can the buyer use the Assignor’s net operating losses (NOL) to offset taxable income?
• In a bankruptcy process, multiple constituencies are represented. In an ABC, there is the assignee. Whom does the assignee hold fiduciary duty to?
• What happens in a large and complex ABC when there is more than one lender, and not all lenders are on board with the ABC?
• Who is responsible for the legacy costs of the assignor following the ABC? 
• Are there situations where an ABC does not make sense from a lender’s perspective?
• What is the Uniform Assignment for Benefit of Creditors Act (UABCA), and why is it important?
• From the distressed shareholder’s perspective, the visibility of traditional bankruptcy can be a problem in terms of stigma. How visible is the ABC process to the general public?

Watch the full Expert Webcast discussion here.

Facing questions around an ABC? Reach out to Harold Israel or another member of LP’s Financial Services & Restructuring Group.