Two new corporate clients have been referred to you. The owners of both corporations have consulted lawyers about their struggling businesses and now seek second opinions. The first was advised by its attorney to file a Chapter 7 bankruptcy petition, the second was advised to file a Chapter 11 petition. You think both should consider an assignment for the benefit of creditors. Why? Stated simply, an assignment for the benefit of creditors, or an ABC, is normally much simpler and almost always less expensive than a comparable bankruptcy proceeding.' The substantial savings in expense results in larger payouts to both unsecured and secured creditors, and the savings in time permits interested parties sooner to get on with whatever is next. Bankruptcy, of course, offers numerous advantages not available in an ABC. However, when, as is often the case, the advantages of bankruptcy are not needed, an ABC is the better choice. Knowing when bankruptcy is not needed is valuable knowledge indeed. Florida's newly amended ABC statute substantially reduces the number of situations in which the advantages of bankruptcy outweigh those of an ABC.
Jeffrey Davis, Florida's Beefed-Up Assignment for the Benefit of Creditors as an Alternative to Bankruptcy, 19 U. Fla. J. L. & Pub. Pol'y 17 (2008), available at http://scholarship.law.ufl.edu/facultypub/332