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Uniform Assignment for the Benefit of Creditors Act Brings Clarity to a Time-Tested Tool

By June 26, 2026July 6th, 2026Thought-Leadership
An Assignment for the Benefit of Creditors (ABC) is a cost-effective and timely alternative to bankruptcy and state court receiverships, among others: a debtor-initiated, voluntary transfer of assets to an assignee serving as a fiduciary to help maximize value and achieve the best possible recovery for creditors and shareholders. Despite the usefulness of ABCs as a tool for businesses, lenders, and practitioners, a longstanding challenge has been the state-specific nature of ABC laws and procedures.
As a result, the ABC framework and process can vary significantly depending on the state in which the assignment is effectuated, given differing laws and statutes, assignment of state court judges and ability to operate. Accordingly, the lack of uniformity has created inconsistencies in administration, limited broader adoption, and introduced uncertainty around the ABC process.
In October 2025, the Uniform Law Commission introduced the Uniform Assignment for the Benefit of Creditors (UABC) Act, which provides model legislation intended to bring greater consistency and predictability to ABC proceedings nationwide. The UABC Act establishes a more uniform framework by providing clarity around key points, including:
  • Defined requirements for assignment agreements and transfer of assets
  • Clear qualifications, duties, and fiduciary obligations of the assignee
  • A structured claims process, including a bar date
  • A standardized framework for creditor priorities and distributions
  • Greater clarity regarding court involvement and oversight of the ABC process

In short, the UABC is intended to provide clarity: streamlining, modernizing, and bringing uniformity to out-of-court liquidations, offering a more predictable and efficient alternative to bankruptcy proceedings and receiverships.

ABC MAP Dark

As of June 2026, the UABC has been enacted in six states: Utah, Nebraska, Alabama, Arizona, Iowa, and most recently Delaware. Three additional states (Colorado, Oklahoma, and West Virginia) have introduced this legislation which is currently under consideration.

While ABCs are not as widely recognized as Chapter 11 or Chapter 7 bankruptcy proceedings, adoption of the UABC by more states could encourage its wider use. The Uniform Law Commission has gained traction quickly since last year, which appears to be a positive sign, even if full nationwide impact remains years away. Widespread implementation will require continued legislative action at the state level.

ABCs occupy a unique space between informal workouts and formal bankruptcy proceedings, which can involve greater costs, longer timelines, and public scrutiny. As the UABC gains momentum in more states, its efforts to create greater consistency and predictability may impact how distressed businesses, lenders and practitioners consider ABCs as part of the broader restructuring and liquidation landscape.

MCA Financial has served as assignees in ABC engagements across numerous states. If you are interested in hearing more about further developments in the adoption of the UABC, contact our team.

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