Assignment for the Benefit of Creditors

Question 1

Purpose of Assignment

Answer 1

Liquidate the property and distribute the proceeds to the debtor’s creditors

Alternative to federal bankruptcy

Question 2

Who is Assignment Available to?

Answer 2

All debtors

People and entities

Question 3

Indenture

Answer 3

Written instrument that begins process of creation of the trust to which property is to be assigned

Question 4

What is Included in the Indenture?

Answer 4

Description of real estate to be assigned to trust

Question 5

Filing of Indenture

Answer 5

Signed indenture must be filed with recorder of the county where debtor resides within 10 days of its execution

Question 6

Trustee for Benefit of the Creditors: Appointment

Answer 6

Selected by debtor

Question 7

Trustee for Benefit of the Creditors: Notice

Answer 7

Must provide notice of the appointment by newspaper publication for 3 successive weeks

Question 8

Administration of Assigned Estate by Trustee

Answer 8

Trustee must:

(1) Manage and protect assets of the estate such that they maintain their value; and
(2) Sell all assigned property within reasonable time after trust is formed

Question 9

Sale of Real Property

Answer 9

Must be sold in same manner that real estate is sold in administration of a decedent’s estate

Question 10

Sale of Other Property: Notice

Answer 10

30 days’ notice by publication in newspaper

Question 11

Sale of Other Property: Sale

Answer 11

Property must be sold at public auction

Court may authorize private sale under certain circumstances

Question 12

Distribution of Money

Answer 12

Distributed to creditors based on priority, as set by state law

Question 13

Discharge of Trustee

Answer 13

Assignment ends 1 year after trust’s creation

Trustee makes final report to the court

Court discharges trustee