Briggs AnalyticsAssignment for the benefit of creditors: what it is, and what happens to the company data
In this article
How an ABC worksABC or Chapter 7The data is an assetWhat founders should do before signingFor assigneesHow an ABC works
The board approves the assignment, and the company signs its assets over to an assignee, a professional who acts for the creditors. The assignee collects what is owed, sells what the company owns, sets a deadline for creditors to file claims, and pays them in the order state law requires. The company then dissolves.
The rules come from state law. In some states, such as California, an ABC runs mostly outside court. In others, such as Florida, a court supervises it.
ABC or Chapter 7
| Assignment for the benefit of creditors | Chapter 7 bankruptcy | |
|---|---|---|
| Law | State law | Federal law (Chapter 7) |
| Who sells the assets | An assignee the company picks | A trustee appointed in the case |
| Court | Depends on the state | Federal bankruptcy court |
| Public notice | Usually less | Public court filings |
| Speed | Often faster | Set by the court process |
The data is an asset
A closed company's code, support tickets, project files, shared drives and email hold years of how the business worked. AI companies now pay for exactly that. Google bid $10 million for Spirit Airlines' records in a court-run sale, and a privacy ombudsman reviewed it (Business Insider, Bloomberg Law). Most companies' records sell for far less, but in a case where creditors are fighting over what is left, they can be a meaningful addition.
Records with personal information need care. Buyers typically remove personal details, and healthcare, financial and education records have their own rules. Some assets, like customer data covered by a strict privacy policy, may be harder to sell or need limits.
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Get my estimate →What founders should do before signing
- Keep every system running. Do not cancel the code host, the ticketing tool, the chat workspace or email.
- Make a list of systems, years of history and who has admin access.
- Hand the list to the assignee so the records get sold with everything else.
For assignees
If you are running an ABC, Briggs Analytics can tell you what a company's records could be worth and find the buyer. There is no cost to the estate to find out. Email bristol@briggsanalytics.com.
In short
- An ABC hands a company's assets to an assignee who sells them and pays creditors.
- It runs under state law; some states use a court and some do not.
- The company's records and code are assets, and AI companies now pay for them.
- Keep every system running until the records are exported or sold.
Questions owners ask.
Is an assignment for the benefit of creditors the same as bankruptcy?
No. It is a state-law process, while bankruptcy is federal. Both end with the company's assets sold and creditors paid.
Who picks the assignee?
Usually the company's board picks a professional assignee, who then acts for the creditors.
Can an assignee sell the company's data?
Generally the records are company assets like any other, subject to privacy laws and the company's contracts. Ask counsel about your case.
Which states have ABCs?
Most states allow them, and the rules differ. California and Florida are common examples, with California mostly outside court and Florida court-supervised.
