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An Assignment for the Benefit of Creditors (ABC) is a legal process through which a financially distressed business voluntarily transfers its assets to a third-party assignee for the purpose of liquidating those assets and distributing the proceeds to its creditors. ABC is an alternative to formal bankruptcy proceedings and is governed by state laws in the United States. In this article, we will explain why an ABC can potentially be a good alternative to bankruptcy, and other reasons why a distressed business should consider it.

Unfortunately, out of the 4.2 million small businesses in California, there are numerous closures every year. Businesses fail, corporations go into bankruptcy, and many Californians are left trying to figure out how to weather the storm.

Cannabis businesses are not eligible for bankruptcy protection due to the federal prohibition against cannabis. Therefore, the receivership remedy is an effective path to address the struggles of a cannabis business. Seeking and obtaining a court-appointed receiver to take control of and operate a distressed cannabis business can be initiated by a lender affected by a failing business loan or a partner in the cannabis business alleging financial mismanagement.

Health and Safety Receiverships can successfully remedy substandard commercial properties in California. Substandard commercial properties may be neglected by absentee owners or landlords causing the property to fall into distress or disrepair. Maintenance needs of substandard income-producing commercial properties are often ignored by the owner to maximize profit by minimizing expenses on needed maintenance. A Court-Appointed Health and Safety Receiver can be the solution to protect communities and tenants from substandard commercial properties.

Health and Safety Receiverships are utilized for a wide arrange of distressed properties, including fire damaged properties. Fires may ignite outside or inside a property for a number of different reasons. Natural wildfires, electrical hazards, smoking and candles, just to name a few. Sometimes the conditions on the property are already so severe (i.e. hoarding, ill-maintained structures, faulty wiring) that the conditions themselves cause a fire. Other times, a perfectly suited property becomes badly damaged by the flames, heat, smoke and water after a fire. Fire damage causes properties to become structurally unsound and compromised and at a risk of collapsing, making it dangerous for anyone to be onsite. Firefighters may have cut holes in walls looking for hidden flames or may have cut holes in the roof to release heat and smoke. Fires often re-ignite even after appearing to be extinguished. Hazardous materials and structural damage pose serious threats to the health and safety of the occupants and surrounding community.

A Health and Safety Receivership is a legal remedy to combat neighborhood blight and transform problematic properties back into safe and habitable structures. A house or building within a community may be deteriorating due to various reasons ranging from severe hoarding, contaminated or unsafe living environments, or owner abandonment. Deteriorating properties are usually produced because no responsible party is willing or able to address the problems on the property. Whether due to an uncooperative property owner, quarreling heirs, disputes regarding title, or an owner that cannot be located, the structure or dwelling is poorly maintained making it an eyesore and hazard to the community. When a property is in severe disrepair and a danger to its tenants or neighboring residents, the property will affect the entire neighborhood.