This is the first of three follow-up blogs to our earlier publication Assignment for the Benefit of Creditors: General Overview. This blog explores ABC’s lack of statutory automatic stay and whether there is a functional and practical equivalent. The next blog will discuss whether a creditor may file a claim after the statutory 120-day deadline.
An involuntary bankruptcy case is typically commenced by a petition joined by at least three petitioning creditors.1 However, an involuntary petition may be filed by a single petitioning creditor if the debtor has 11 or fewer “qualified” creditors.2 This is often called the “numerosity” requirement. The Bankruptcy Code, in Section 303(b)(2), expressly defines which creditors count in the numerosity requirement.
If you are considering bankruptcy for your insolvent business, an Assignment for the Benefit of Creditors (“ABC”) might be your answer. An ABC is a less expensive, quicker, quieter, and simpler alternative to traditional bankruptcy. An ABC is a state law procedure utilized to liquidate a failed, insolvent, or no longer viable business. Fla. Stat. § 727.101.