Assignment for the Benefit of Creditors (ABCs)

The ABC is an Alternative to Bankruptcy

Sherwood Partners is the leading Assignee for Assignments for the Benefit of Creditors (ABCs) in the United States. We developed many of the standards currently used to create an effective outcome and are called upon when a company has to make the hard decision between filing a bankruptcy or considering an Assignment for the Benefit of Creditors (ABC). We have been the Assignee for both private and public companies.

Our team understands the complexities of an Assignment as it takes much more than just signing a contract between the Assignor (the Company) and the Assignee. A deep understanding of the specific situation, a comprehensive strategic plan to properly and efficiently monetize the assets for the benefit of the creditors is required. Sherwood Partners also developed the “Operating ABC”, which may bring additional value to the estate. We also developed a new alternative to the basic ABC process; ABCs 2.0 which can be an excellent alternative to filing bankruptcy.

Assignments for the Benefit of Creditors
Full Asset Monetization
Full Asset Monetization

Full Asset Monetization

Sherwood Partners developed and initialized the ‘FULL ASSET MONETIZATION’ process. The last thing any manager, investor or board member wants is to revisit a situation months or years later. We have been successful in fully monetizing the assets of the company due to our deep relationships with both national and international buyers. Our database is rich and deep, enabling us to reach out to the ‘right person’, which is always the key to any successful monetization process. The industry knows Sherwood and Sherwood knows the industry.

We Assume Responsibility

The benefits of an Assignment for the Benefit of Creditors (ABC) are numerous. The debtor company selects the Assignee, which should be done with caution. Once Sherwood Partners becomes the assignee, we take control and work through the problems and burdens of the company. Simply put, the problems are transferred to the Assignee. The management team, investors and the board can then move forward with their lives and everyday business. Also, the personal liability of the directors and officers of running an insolvent company (in the zone of insolvency) ceases to be an issue, once the assignment of assets occur.

The Assignment for the Benefit of Creditors can also be an excellent option for companies acquiring insolvent companies and desiring an “Asset Purchase”.

We Assume Responsibility
We Assume Responsibility

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The Process

1 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);
2 Assignee acts as a fiduciary for the creditors by liquidating all assets and then distributing the proceeds to the creditors;
3 Secured creditors are paid from proceeds derived from their security, relieving them of the legal costs and burden of foreclosing and selling their collateral;
4 In this process, the unsecured creditors cannot follow the assets that are sold;
5 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);
6 Assignee is able to review, control, clean-up and work toward closure to the corporate situation before and during the sale of assets.

The Process

1 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);
2 Assignee acts as a fiduciary for the creditors by liquidating all assets and then distributing the proceeds to the creditors;
3 Secured creditors are paid from proceeds derived from their security, relieving them of the legal costs and burden of foreclosing and selling their collateral;
4 In this process, the unsecured creditors cannot follow the assets that are sold;
5 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);
6 Assignee is able to review, control, clean-up and work toward closure to the corporate situation before and during the sale of assets.

The Benefits

The Assignee is selected by the company and is not court appointed;
There is usually less notoriety than with a bankruptcy;
The Assignment for the Benefit of Creditors (ABCs) is cost effective;
The process is less formal, with few or no court hearings;
The ability to move with speed (this can be very important in preserving the value of the assets);
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, (i.e. “Assets of Widgets, Inc. have been acquired by XYZ Company”.

The Benefits

The Assignee is selected by the company and is not court appointed;
There is usually less notoriety than with a bankruptcy;
The Assignment for the Benefit of Creditors (ABCs) is cost effective;
The process is less formal, with few or no court hearings;
The ability to move with speed (this can be very important in preserving the value of the assets);
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, (i.e. “Assets of Widgets, Inc. have been acquired by XYZ Company”.

Doing it right takes more than just signing a contract with the Assignee. It takes a strategic plan and a knowledgeable Assignee!

Since 1999, Sherwood Partners has been the Assignee for over 1,000 Assignments for the Benefit of Creditors (ABCs). Some assignees try to walk the walk, but what they offer is ‘lip service’. An effective Assignment for the Benefit of Creditors (ABC) take more than signing a contract, collecting boxes and then trying to make the claim that they have successfully monetized the assets of the company. Sherwood Partners is considered the premier and “Gold Standard” Assignee in the United States.

In today’s complex world the “Operating Assignment for the Benefit or Creditors” or the ABC 2.0 is a very useful method to work towards a graceful and respectable exit or purchase of assets. If Intellectual Property (IP) is involved, it is impossible to just collect boxes and wait, hopefully for the call to properly monetize these assets. Sherwood Partners has monetized IP assets higher than any assignee due to our relationships and understanding of IP value.

Investors, financial and legal institutions call upon Sherwood Partner to become the Assignee, due to our ability to monetize certain assets and collect the receivables through the “Operating ABC”.

Strategic Plan
Strategic Plan

Contact

Sherwood Partners, Inc.

Silicon Valley | Los Angeles | New York

3945 Freedom Circle
Suite 560
Santa Clara, CA 95054

Phone: 650-454-8001
Fax: 650-454-8040

info@sherwoodpartners.com

 

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