Arthur van der Vant is an Illinois Receiver and a recognized ABC assignee. The Assignment of Benefit for Creditors can help businesses and creditors alike. Here are some FAQ about the process. Answers are from Illinois Receiver Arthur van der Vant.
Q:Arthur van der Vant, how does the process start once an Assignee has been selected?
Arthur van der Vant: The Assignee must give notice of the assignment and give creditors time to file their proof of claims after the assignment is made. The assignment agreement usually contains a Power of Attorney to enable the Assignee to take actions as necessary on behalf of the company.
Q:What are the benefits to the debtor in an ABC?
Arthur van der Vant: Using services of the Illinois Receiver Mr. Arthur van der Vant as the Assignee in the Assignments for the Benefit of Creditors may save time and expense. ABC proceedings are less complicated and debtors do not have as many hoops to jump through as in bankruptcy cases. ABC does not show on a Credit Report. Whereas a bankruptcy can drag on for several years, an ABC can be successfully completed in less than a year.
Q:Are there creditor benefits as well?
Arthur van der Vant: ABCs are also better for creditors, since creditors can get paid more and much quicker than in a bankruptcy. An ABC process also gives the Assignee a great amount of freedom to be creative as to how to wind down the business and to proceed to prove ABC successful for debtors and creditors.
Q:Is an ABC always best, Arthur van der Vant?
Arthur van der Vant: For some debtors or creditors, in certain situations, an ABC may be a disadvantage because Illinois does not have “mini-preference” provisions, and creditors lose some of the protections afforded to them under the U.S. bankruptcy code. Creditors can force debtor who elects ABC into an involuntary bankruptcy within 120 days of the date of the assignment. However, the bankruptcy court has the option to either take the case or refrain or allow the ABC to be completed by the Assignee. ABC also does not provide for an “automatic stay” for debtor as imposed by the Bankruptcy Code §362.
Q:Does an ABC stop other claims?
Arthur van der Vant: After an Assignment is made; creditors are not barred from seeking to collect on their claims by bringing lawsuits and obtaining judgments. However, their judgments would be junior to the lien the Assignee would have and would not give the creditor any greater advantage.
Q:What is the priority of claims, Arthur van der Vant?
Arthur van der Vant: The priority of claims may very; although, generally they are as follows:
1. Secured creditors who have valid and perfected liens against the assets of the business.
2. Any federal government agency.
3. Administrative costs of Assignee.
4. Benefits and wages to employees that accrued but were not paid prior to the ABC.
5. State and local taxes.
6. Unsecured creditors.
Q:Do all creditors get paid?
Arthur van der Vant: It is important to recognize that each priority level (group) must be paid in full before the following priority level (group) would receive any compensation on a pro-rata basis. In the event there is not enough money for every priority level (group), the Assignee is not responsible for payment of those claims. In the event a claim is filed late, or not reflected on the company’s books and records an Assignee may object to the payment of such a claim to insure proper distribution to creditors with proof of claim.
Q:What is a “Preferred Creditor?”
Arthur van der Vant: Prior to assignment, businesses often pay their creditors not based on priority of claim, but based on “preferred” creditor status. Such preferential transfer if made shortly before the assignment is made may be re-classified as a “preference” and not as a priority.
Q:What can you as anAssignee do when “Preferred Creditors” are the only ones who have been paid, Arthur van der Vant?
Arthur van der Vant: In some cases to restore creditor’s claims I may also recover assets from “preferred” creditors who received property or a value based on a “preferential transfer” and may restore a creditor’s priority that they would have had at the time of the assignment, as if the “preferential transfer” did not take place.
Q:How can a transfer of funds be classified as “preferential” and avoidable?
Arthur van der Vant: Several reasons;
1. The transfer was made within 90 days prior to the assignment.
2. The creditor was owed a pre-existing debt, which the debtor intended to satisfy with the transfer.
3. The creditor received more by transfer than it would have received based on its priority of claim in the ABC process.
Q:How arecreditors paid, Arthur van der Vant?
Arthur van der Vant: ABCs similarly to bankruptcy filings are collective proceedings in which the debtor transfers all of its assets to the Assignee who then liquidates those assets to pay creditors based on their priority of claim.
Q:How can I contact the offices of Arthur van der Vant to find out more?
Arthur van der Vant: Contact the office of the Illinois Receiver Arthur van der Vant online or call 1-800-496-9107 to discuss the Assignment for the Benefit of Creditors process and to learn whether your business can benefit from ABC.
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