Assignment for the Benefit of Creditors (ABC)

An Alternative to Bankruptcy

An ABC (Assignment for the Benefit of Creditors) is a legally prescribed business liquidation mechanism under many state codes that is an alternative to a formal bankruptcy proceeding. In many states as well, this ABC process is handled outside of the judiciary system. Therefore an ABC results in significantly lower expenses, more stream-lined procedures and a more genteel conclusion than in a bankruptcy filing. In certain industry sectors such as technology or life science, it can also be a better alternative to monetize the assets for the benefit of the creditors.

It is an unfortunate fact of life today that many innovative companies, particularly those in emerging industries will not survive and face closure of their dream. There are a few alternatives such as bankruptcy or walking away and doing nothing, but the ABC (Assignment for the Benefit of Creditors) process has proven to be a very successful alternative. The ABC, Assignment for the Benefit of Creditors is an excellent alternative that will provide proper closure of a company. Though bankruptcy is an alternative, it is usually more expensive and may not offer the proper personnel to properly monetize the assets of your company. Walking away is also an alternative, but not having a proper closure mechanism does not properly protect the investors, the board or management of any company.

If this reality affects your company, the management, investors and management will find themselves in one of the most difficult situations of their careers. It is an emotional, tense, stressful and overwhelming period. Sherwood Partners' expertise, particularly as the foremost leader in the ABC process can greatly ease the pain of this situation. While it may seem that an in-house manager may be best suited to wrap-up the business, we can demonstrate otherwise. There are numerous legal, financial and operational issues and through the ABC process Sherwood has successfully protected the investors, management and the board. Sherwood has successfully; through the closure process of an ABC monetized the corporate assets for the benefit of creditors. Sherwood created and is known for the "Operating ABC". In many industries, without operating the company through the ABC process, it will be difficult to properly monetize the IP (Intellectual Property).

Historically, an objective third-party is best suited to work with the credit and financial community to obtain the best results. Since 1999, Sherwood Partners has been the Assignee for the ABC process in over 150 companies, both private and public. We understand the issues, we know the credit, financial and legal communities and they know Sherwood. Bottom line...we know how to tie-up all of the loose ends and monetize the assets!

Prior to accepting an ABC, we review potential scenarios for the survival of the company. Sherwood has recommended solutions, prior to the company making an Assignment for the Benefit of Creditors and has been successful in assisting the company in restructuring. Whether it is reorganization (inside or outside of bankruptcy), a merger partner or the chance to "hibernate" a business, Sherwood Partners can assist your company in times of change. Once the wind-down becomes a certainty, an ABC may well be the most attractive course of action. In this process, asset values are maximized and negative publicity is minimized.

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