Resolution Financial Advisors · Perspectives
Assignments for the Benefit of Creditors are governed by a patchwork of state laws. Five perspectives — five reasons a modern, uniform framework preserves value for everyone at the table.
Rule 01 · Employees
When businesses fail, employees are often among the most vulnerable stakeholders — yet employee protections in ABC proceedings vary dramatically by state, and many statutes have not kept pace with modern economic realities.
Fixed by statute. It does not adjust — no matter how far labor costs and the cost of living rise.
Adjusted periodically for inflation. The Uniform ABC Act brings ABCs in line with the Bankruptcy Code's adjustments.
As costs rise, a fixed statutory cap gradually loses practical meaning.
A more modern and uniform framework could provide:
Rule 02 · Buyers
Sale procedures, notice requirements, and assignee authority vary significantly from state to state. That inconsistency creates diligence costs and transaction risk for buyers evaluating distressed opportunities — and often a barrier for their financing partners, counsel, or boards.
Lower bids, discounted for process uncertainty
Longer timelines while rules get untangled
Increased retrade risk late in the deal
Fewer qualified bidders show up at all
Buyers engage aggressively when the process is predictable and the rules are clear. Stronger process certainty doesn't just benefit buyers — it can directly improve recoveries for creditors and preserve more going-concern value overall.
Evaluating a distressed opportunity? Talk to our team →Rule 03 · Secured Lenders
When a business enters distress, time is rarely neutral. Outside the jurisdictions where ABCs are common, many lenders are unfamiliar with the process — and inconsistent state rules create differing timelines, requirements, and expectations depending on where an assignment occurs.
Hover the markers — each one erodes value while stakeholders navigate uncertainty
For secured lenders, inconsistency can mean:
Navigating a distressed situation? Talk through your options with our team — confidentially.
Contact RFARule 04 · Trade Creditors
Trade creditors are often the first to feel the effects of a company's financial distress. Because ABC procedures vary by state, the answers to their hardest questions are not always consistent. Tap each question below.
Rule 05 · States
Today's businesses operate across state lines, but the laws governing Assignments for the Benefit of Creditors remain anything but uniform. That patchwork creates uncertainty for debtors, creditors, employees, buyers, lenders, assignees, courts — and the professionals guiding businesses through distress.
50 states · 50 different rulebooks
The Uniform ABC Act gives states the opportunity to modernize their insolvency laws while preserving state control over the process — consistency where consistency improves outcomes.
Reduce transaction costs
Encourage investment
Preserve enterprise value
Strengthen out-of-court restructurings
The Bottom Line
"Business failure will always be disruptive. The legal framework surrounding it does not need to add avoidable friction."
Molly Froschauer · Partner, Resolution Financial Advisors
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