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Use of General Assignments to Consummate A "Quick Sale" |
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In Order to Preserve Value Goodwill may be a significant asset whose value can be realized only through a "turn-key" sale to someone already interested in purchasing the assignor's business. Where a buyer has been located who is willing to pay more than the distressed liquidation value of the debtor's assets, and the debtor is looking for a vehicle to effect a quick sale to the buyer free and clear of liens and encumbrances, an assignment can keep the assignor's assets in place for a period of time to consummate the sale. An assignee may also operate a business for a short period of time in hopes of locating a buyer for purposes of selling the company as a going concern, and/or conduct an orderly liquidation of the debtor's assets that would maximize the value over a straight public auction. A Chapter 7 Trustee has no incentive to undertake this type of extra work or spend the time and money required seeking court approval to pursue this type of turnkey sale.
Consent of Creditors to the Assignment In situations where the liquidation value of the assets exceeds the secured creditor's lien, the assignee is not required to obtain the consent of the secured creditor prior to taking the assignment. However, since the cooperation of the secured creditor frequently affects the liquidation of assets, CMA routinely obtains the consent of the secured creditor(s) in advance of the assignment. The acceptance by unsecured creditors is not necessary since under common law the proceedings, an assignment is deemed to benefit all unsecured creditors through equality. Assignee's Ability to Recover Preferential Transfers An assignee may recover transfer of property paid to creditors on account of an antecedent debt that enabled one creditor to receive more than another creditor would have received of the same class. The transfer must have been made within 90 days of the assignment, or one year if the creditor is an insider, while the assignor was insolvent. |
