Know Your ABCs: Assignments For The Benefit Of Creditors

When a business is in financial trouble, many think bankruptcy is the only path forward. The reality is there are many things a struggling business or its creditors can do to try and right the ship. At Hanson & Payne, LLC, we work with business owners, creditors, and lenders in the Milwaukee area who need legal counsel to stay afloat. One commonly used, but not commonly understood tool is an assignment for the benefit of creditors, which is abbreviated as an ABC. Sometimes they are also called receiverships. 

What Is An Assignment For The Benefit Of Creditors?

According to Black’s Law Dictionary, an ABC is a transfer “of a debtor’s property to another person in trust so as to consolidate and liquidate the debtor’s assets for payment to creditors, any surplus being returned to debtor.” If you are thinking “that sounds a lot like a Chapter 7 bankruptcy,” you are correct. ABCs work a lot like Chapter 7 bankruptcies, but ABCs are a creature of state law. 

Why Not File For Chapter 7 Bankruptcy? 

Some people choose to go through the ABC process instead of filing for Chapter 7 bankruptcy because they believe it is quicker, and therefore cheaper. Whether this is true really depends on the specific situation the debtor is in. 

There is also a belief that assets will sell higher through the ABC process because it doesn’t carry the same stigma as a bankruptcy. Once again, this depends on the situation at hand. 

A growing number of debtors do not choose to go through the ABC process, but are pushed into it by their creditors. Under federal bankruptcy law, it typically takes three unsecured creditors to force a debtor into involuntary bankruptcy. Under Wisconsin’s ABC statute, which is in chapter 128, a single secured creditor can file a petition for an involuntary ABC. This makes the process very appealing to secured creditors. 

What Happens After A Case Is Filed? 

Once an ABC is filed, a receiver is appointed. The receiver takes responsibility for running the debtor’s business. They typically search for some who will buy the business as a going concern, and if that fails, they wind down operations and sell off individual assets. 

Hanson & Payne’s experienced attorneys provide legal counsel in these cases. We make sure the business and financial deals struck by the parties involved are not held up by legal issues. 

A Business-MInded Legal Team In The Milwaukee Area

Whether you are a business owner, creditor, or lender, you need reliable legal counsel if you are going to be involved in an ABC or a bankruptcy. Hanson & Payne LLC is a business-minded team of attorneys you can count on to advise you if you are in a difficult financial situation. We are located in Milwaukee, but handle cases across the state of Wisconsin. Please contact us today to schedule an initial consultation.

D-I-V-O-R-C-E Leads To B-A-N-K-R-U-P-T-C-Y

Tammy Wynette had a hit on her hands when she recorded the song D-I-V-O-R-C-E. In it, she laments the fact that she and her husband are splitting up and tries to hide her sadness from her son. Wynette’s gut-wrenching delivery is punctuated by her sincerity — which probably had something to do with the fact that she herself was divorced multiple times.

Although Wynette made a good musical choice when she followed D-I-V-O-R-C-E with her massively successful Stand By Your Man, we have often wondered if she should have cut a record called B-A-N-K-R-U-P-T-C-Y. For many of our Milwaukee area personal bankruptcy clients, bankruptcy follows in divorce’s wake. 

This is not surprising when you consider two things. First, getting divorced is expensive. Legal fees can add up quickly if it is not an easy breakup, and it takes a substantial amount of cash to move out and move on, particularly if you have children. Second, after their divorce is finalized, many divorcees see their household expenses remain the same or increase while their household income is halved. 

Bankruptcy is often a great option for recent divorcees who want a clean financial slate to match their newly single status. Filing for bankruptcy under Chapter 7 is a quick way to wipe out many of your debts and get a fresh lease on life. 

However, it is important to note that many expenses related to getting divorced cannot be discharged through bankruptcy. Filing for bankruptcy does not eliminate the responsibility to make alimony or child support payments or wipe out payments that are overdue. If a court-ordered support payment is causing financial difficulty, the only way to get it reduced or eliminated is to go back to family court and ask for it to be adjusted.

Court fines or penalties and attorney fees related to a past child custody or support battle are also non-dischargeable. If you are finding these impossible to pay off, your best bet is to get them put into a repayment plan. Filing for Chapter 13 bankruptcy might be a good option in this situation. The Chapter 13 bankruptcy process includes a debt consolidation and repayment plan that lasts for three to five years. 

While most divorces related to bankruptcy are filed after the couple has split up, it is worthwhile to mention that filing jointly, before the divorce is finalized, may be beneficial to both parties. If the split is amicable, and it will not be difficult to cooperate and share financial documents with one another, filing bankruptcy before filing for divorce can help both parties land on a firm financial footing. Many couples take on debt jointly, so dealing with that through the bankruptcy process can be easier than sorting financial issues out in divorce court. 

If you are thinking about filing for bankruptcy, the experienced attorneys at Hanson & Payne, LLC are ready to discuss your options and guide you through the process. We will listen to your story and work with you to figure out your end goals, so we can help you find the best path forward. Please contact our Milwaukee office today to schedule an initial consultation

Without Bankruptcy, The Packers Might Not Exist

Another football season is upon us, and the Hanson & Payne team is ready to don our green and gold. While every good Packer fan knows they are the only non-profit, publicly-owned professional sports team in the country, few know that bankruptcy played a role in helping the Packers adopt this organizational format. 

According to official Packers’ history:

While the Packers were in the process of winning the 1931 championship, they also were blindsided by what could have been a catastrophic event. In their second game, against the Brooklyn Dodgers, a local fan, Willard J. Bent, injured his back when a section of bleachers at City Stadium collapsed, and he fell nearly 10 feet to the ground.


Bent sued the Packers and was awarded roughly $5,000 following a trial in February 1933. With the country in a deep depression, the Packers’ insurance company went into bankruptcy before the claim could be adjusted, and the Green Bay Football Corp. went into receivership while it appealed the case in court.


Somehow the Packers survived the proceedings long enough to be saved, once again, by two seminal events.


The first was the creation of a new corporation, The Green Bay Packers, Inc., in January 1935 following a second stock sale. That corporation remains in existence today, although “The” was removed from the name in 1997.


The other was the signing of Don Hutson less than a month later.

As we frequently point out, the bankruptcy of one business often causes a chain reaction. Who knows how many businesses were impacted when the Packers’ insurance company filed for bankruptcy. It is unlikely that other impacted businesses were as lucky as the Packers, who had a friendly receiver helping the team deal with the legal side of its financial issues, and a devoted fan base that was willing to bail them out. 

In the 1950s, the Packers were once again on the brink of bankruptcy. Another stock sale, and the insurance payout from a suspicious fire at the infamous Rockwood training facility, kept the team afloat. 

Today, the team is valued at $3.475 billion. It is nowhere near bankruptcy, but it is interesting to note that filing for bankruptcy would probably be the only way the team could ever leave Green Bay. The team’s unique ownership structure means it is a permanent fixture in the community. If it were to file bankruptcy, the proceeds remaining after assets were sold off would go to the Packers’ charitable foundation. Stockholders would not get any financial benefit from the sale. 

The Packers are unique. (And they are going to stay that way. NFL teams are now limited to a maximum of 32 owners, and one person must own at least 30% of the team.) We can’t think of any other business that has the community support needed to avoid bankruptcy in the same way. Fortunately, the modern bankruptcy system provides a secure safety net. If your business is struggling, you can count on the Hanson & Payne team to get you across the end zone. Please contact us today to schedule an initial consultation.