Illinois Receiver Arthur van der Vant has helped countless corporations, LLC, and partnerships avoid bankruptcy through a process known as Assignment for the Benefit of Creditors, most commonly referred to as “ABC.” Arthur van der Vant is an expert in corporate turnaround and commercial real estate as well an adept and experienced business executive. Here, van der Vant offers information about the ABC process and what it means to everyone concerned.
Illinois Common Law
Arthur van der Vant explains that the Illinois ABC process is a contractual general assignment based on Illinois common law. Through an assignment, debtors release their assets to the control of a trustee. This trustee, or assignee, is responsible for the physical state of the assets in questions, says Arthur van der Vant. These assets may be sold to generate fund to settle outstanding debts or the assignee can essentially take over day to day operations of the debtor entity to generate additional profits and to enhance the estate. According to Arthur van der Vant, an ABC is a voluntary process and the assignee is chosen by the debtor.
ABC Versus Chapter 7 and Chapter 11
Bankruptcies are a matter of the public record, ABCs are not. The biggest benefit of an assignment is that it is cost effective and can be completed more efficiently than Chapter 7 or Chapter 11 proceedings, notes Arthur van der Vant. Also, since the Illinois ABC process is non-judicial, it can be quicker, and it can be done with less notoriety for the debtor. Unlike a Chapter 7 Bankruptcy, an ABC allows for the business to operate under the assignee’s control to generate additional income to be used to repay its debts.
Benefits to the Debtor
Arthur van der Vant explains that an ABC does not mar a debtor’s credit score. Additionally, once the assets are liquidated and all creditors are paid in full, Arthur van der Vant says that excess funds, if any, are returned to the debtor.
The ABC process is less complicated, says Arthur van der Vant. This translates into less wait time for creditors to receive more of their funds. According to Arthur van der Vant, an ABC may be completed in months whereas a federal bankruptcy case may extend debt settlement by years. Arthur van der Vant also notes that the general assignment process typically generates a larger income in which to repay creditors. This can help the creditor regain a larger portion of owed funds and decrease the likelihood of having to write off large amounts, reports Arthur van der Vant.
The assignee is in a position to gain a clear understanding of how a business was functioning that made it fail in the first place, says Arthur van der Vant. The assignee will have access to all documentation and financial records, and would investigate the debtor’s true and honest value. Arthur van der Vant notes that one of the most important roles the assignee plays is investigating the debtor’s financial habits in the time before the ABC to determine if there was any possible attempt to defraud creditors by hiding assets, or payouts made based on preference versus priority.
Question: Can an Assignee such as Arthur van der Vant act on behalf of the debtor to collect debts owed to them?
Answer: A debtor in the assignment (ABC) may also be a creditor to whom monies are owed. For example; imagine a Widget Corporation that sold goods or services but did not receive a payment from its costumes and as a consequence of its financial difficulties elected to do an ABC. Upon assignment the assignee (Arthur van der Vant) would own any and all rights to and interest in all assets including Widget’s account receivables. Therefore, after the assignment the assignee (Arthur van der Vant) could take legal action to collect and recover debts owed to Widget Corporation who is now debtor in ABC.
Question: How can I get in touch with Arthur van der Vant about his Assignee services?
Answer: A full description of Arthur van der Vant ’s Assignee services and duties may be found by visiting www.illinoisreceiver.com
Question: As an Assignee, is Arthur van der Vant legally operating as the in-debt business or is he considered a third and neutral party?
Answer: Similarly to a Bankruptcy Trustee, in the Assignment for the Benefit of Creditors (ABC), Arthur van der Vant (assignee) becomes a third party who takes the control and management over debtor’s assets, but Arthur van der Vant is not the debtor. Upon assignment Arthur van der Vant obtains all decision making over debtor’s interests, including over its board of directors, if any, and could continue to operate the business for an undefined period of time, but keep in mind that his purpose is to close the business and to liquidate its assets to pay creditors.
Question: Does the ABC process provide for an automatic stay for the debtor as in the Bankruptcy Code §362?
Answer: No, the Assignment for the Benefit of Creditors (ABC) does not provide for an automatic stay and creditors may obtain judgments against the debtor entity(s). However, before initiating any legal action after the assignment, creditors must also evaluate how much a judgment is worth against a debtor entity that has no assets?
Question: Once Arthur van der Vant has accepted the assignment, could debtor’s creditors force the debtor into a bankruptcy if they feel it would better serves their purposes?
Answer: It is possible during the first 120 days after the assignment for creditors to force the debtor in ABC into an involuntary bankruptcy. However, it is also worth noting that the bankruptcy court may reject the involuntary bankruptcy in favor of the ABC, if there is no compelling justification for the involuntary bankruptcy v. ABC.
Question: What are Arthur van der Vant’s fees for ABC services?
Answer: Arthur van der Vant’s fees in ABC very on case by case bases and are usually relative to the difficulty of the assignment. Arthur van der Vant may charge an upfront flat fee upon assignment, a percentage of value generated, an hourly rate, or a combination of all the above. Regardless of the fee, Arthur van der Vant will not take an assignment unless a value can be created for the creditors.