On March 3, 2026, Nebraska became the first state to adopt the Uniform Assignment for Benefit of Creditors Act (the “Act”). An assignment for the benefit of creditors (“ABC”) is a voluntary transfer of a business’s assets to an independent assignee for the purpose of liquidating those assets and maximizing their value for the benefit of creditors. Although ABCs are substantively similar to Chapter 7 bankruptcies, they are not directly supervised by courts and do not have to comply with the federal bankruptcy code or other rules of civil procedure. As such, ABCs can offer a faster and more flexible alternative to bankruptcy. Due to the nature of an ABC, the Act specifically identifies who it applies to (the assignor) and who can serve as an assignee. For a business or individual to initiate an ABC as an assignor under the Act, it must (1) have a principal place of business in Nebraska; (2) have its internal affairs governed by Nebraska law; (3) reside in Nebraska; or (4) be an affiliated entity that is, at least partially, owned by a Nebraska-based entity. If the assignor falls within this criteria, it may assign its assets to an assignee for liquidation as long as the assignee (1) is not a creditor, affiliate or insider of the assignor; (2) is not an affiliate or insider of a creditor; (3) does not have claims against the assignment estate (the “Estate”); or (4) does not have a material financial interest in the outcome of the ABC. Initiation of the ABC An ABC is initiated when both the assignor and assignee execute the Assignment Agreement (the “Agreement”). To comply with the Act, the Agreement must be signed by both the assignor and assignee and include the following: • The name and address of the assignor and assignee; • A provision transferring or providing for the transfer of all the assignor’s assets; • A sufficient description of the assigned assets to identify them; • A provision governing the distribution of the Estate; • A description of the assignee’s fees and the basis for calculation; and • A representation by the assignor, under the penalty of perjury, that it is assigning all its assets. Importantly, the Act requires the assignor to transfer all its assets to ensure the Estate possesses all property subject to creditors’ claims. If the assignor fails to assign all its property, it risks losing the protections and benefits of the ABC process. Assignee’s Duties and Responsibilities Upon execution of the Agreement, the assignee obtains all rights, title and interests of the assignor in the assigned assets and must comply with fairly rigorous requirements in administering the Estate. Specifically, the assignee becomes a fiduciary who is legally obligated to (1) manage the ABC in good faith; (2) use reasonable care to maximize COUNSELOR’S CORNER Nebraska’s New Assignment for Benefit of Creditors Act What Creditors Need to Know Mike T. Franken Baird Holm LLP 15 NEBRASKA BANKER
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