Assignment for the Benefit of Creditors

An Alternative to Bankruptcy

Sherwood Partners, LLC has been the assignee for both private and public companies and our team understands that it takes much more than just signing a contract with an assignor. It takes a comprehensive strategic plan, to properly monetize the assets for the benefit of creditors.

The last thing any manager, investor or board member wants is to revisit this situation months or years later.

As the creators of the "Operating ABC" Sherwood has developed unique techniques to monetize assets for the benefit of creditors.

The benefits of an ABC are numerous. Once Sherwood Partners becomes the assignee, we take control and work through the problems of the company. These problems become are transferred to the assignee. The management team, investors and the board can move forward with their lives and everyday business. Also, the personal liability of directors and officers for running an insolvent company ceases to be an issue once the assignment of assets occurs.

Other benefits include:

  • The Assignee is selected by the company and is not court appointed
  • There is usually less notoriety than with a bankruptcy
  • The ABC is cost effective
  • The process is less formal, with few or no court hearings
  • The ability to move with speed
  • Flexibility to permit smart business choices
  • Usually provides closure and finality to the company, its board and its management
  • Asset sales can occur quickly, allowing for a higher price under such circumstances;
  • A third party can acquire title to the assets in a purchase transaction;
  • Intellectual property may sometimes be transferred to another entity;
  • Limited operations can be continued to maximize the remaining value in company;
  • Contractual obligations can be negotiated and resolved efficiently;
  • If a press announcement is required, it can be simple and positive, such as “Assets of Widgets, Inc. have been acquired by XYZ Company”.

The process:

  • Your company (assignor) enters into a contract whereby it transfers all rights, titles, interests, custody and control of all assets to an independent third-party trustee (assignee);
  • Assignee acts as a fiduciary for the creditors by liquidating all assets and then distributing the proceeds to the creditors;
  • Secured creditors are paid from proceeds derived from their security, relieving them of the legal costs and burden of foreclosing and selling their collateral;
  • In this process, the unsecured creditors cannot follow the assets that are sold;
  • A formal claims process is established for unsecured creditors, thus allowing the assignee to limit and control ongoing liabilities of the company (Proof of Claims http://www.proofofclaims.com/ );
  • Assignee is able to review, control, clean-up and work toward closure to the corporate situation before and during the sale of assets.

It Takes More than Just Signing a Contract…It Takes a Strategic Plan

Since 1999, Sherwood Partners, LLC has been the assignee to over 200 Assignments for the Benefit of Creditors (ABCs). Some assignees try to walk the walk, but all they do is collect boxes of data and try to make the claim that they have successfully monetized the assets of the company.

In today's complex world the "Operating ABC" is a very useful method to work towards a graceful exit or purchase of assets. If IP (Intellectual property) is involved, this is almost impossible to just collect boxes and wait for the call to properly monetize these assets. Historically, Sherwood has monetized IP higher than any assignee. It is because of how we do an ABC.

We have also been successful in avoiding the ABC process and restructuring a situation that the management team or investors felt was hopeless.

Contact Sherwood Partners to discuss how we can help.