Uniform Assignment for Benefit of Creditors Act; creates a voluntary state law process for distressed organizations to liquidate assets and distribute proceeds to creditors

SB15 ENROLLED
Page 0
SB15
FKG8J5C-3
By Senator Givhan
RFD: Fiscal Responsibility and Economic Development
First Read: 13-Jan-26
PFD: 20-Aug-25
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PFD: 20-Aug-25
Enrolled, An Act,
Relating to secured transactions; to create the Uniform
Assignment for Benefit of Creditors Act; to provide for
definitions and the scope of the act; to provide requirements
for assignee and assignment agreements and for the effect of
assignments; to provide requirements for filing, recording,
and title transfers; to provide for notification to creditors;
to provide for the duties and powers of assignors and
assignees; to provide for allowed, disallowed, and disputed
claims; to provide requirements for a proof of claim; to
specify the rights of transferees; to provide for
distributions, claim subordination, and the validity of
subordination agreements; to provide for the liability of
assignors and assignees, the removal of assignees, and the
appointment of successor assignees; to provide for the winding
up and final accounting; to provide for interstate matters,
potential court action, and ancillary assignees; and to
specify which provisions of an agreement may vary.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Short title.
This act shall be known and may be cited as the Uniform
Assignment for Benefit of Creditors Act.
Section 2. Definitions.
For the purposes of this act, the following terms have
the following meanings:
(1) AFFILIATE. Includes:
a. A person that directly or indirectly owns, controls,
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a. A person that directly or indirectly owns, controls,
or holds, with power to vote, 20 percent or more of the
outstanding voting interests of another person, other than a
person that holds the interests:
1. In a fiduciary or agency capacity without sole
discretionary power to vote the interests; or
2. Solely to secure a debt, if the person has not in
fact exercised the power to vote;
b. A person with 20 percent or more of the person's
outstanding voting interests directly or indirectly owned,
controlled, or held, with power to vote, by another person;
c. A person whose business is operated under a lease or
operating agreement by another person, or a person
substantially all of whose assets are controlled by the other
person; or
d. A person that operates the business or substantially
all the assets of another person under a lease or operating
agreement.
(2) ASSET. A legal or equitable interest in property of
an assignor, regardless of the person holding or in
possession, custody, or control of the property or where the
property is located. The term does not include:
a. A legal or equitable interest in property restricted
from assignment if the restriction is effective under other
law, unless the other law permits assignment with the consent
of another person and the person consents to the assignment in
a manner permitted by the other law; or
b. If the assignor is an individual, a legal or
equitable interest in property to the extent the equitable
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equitable interest in property to the extent the equitable
interest is exempt from legal process under other law.
(3) ASSIGNED ASSET. An asset transferred under an
assignment.
(4) ASSIGNEE. A person to which assets are transferred
under an assignment.
(5) ASSIGNMENT. A transfer by a person of all the
person's assets to another person for the benefit of the
transferor's creditors.
(6) ASSIGNMENT AGREEMENT. An agreement that transfers
or provides for a transfer of all the assignor's assets.
(7) ASSIGNMENT ESTATE. The assets held at a given time
by the assignee under an assignment.
(8) ASSIGNOR. A person whose assets are transferred
under an assignment.
(9) CLAIM. A creditor's right to payment or to an
equitable remedy, regardless of whether the right is reduced
to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable,
secured, or unsecured.
(10) COHABITANT. Each of two individuals not married to
each other who live together as a couple after each has
reached the age of majority or been emancipated.
(11) CREDITOR. A person that has a claim against an
assigned asset or the assignor.
(12) ELECTRONIC. Relating to technology having
electrical, digital, magnetic, wireless, optical,
electromagnetic, or similar capabilities.
(13) GOOD FAITH. Honesty in fact and the observance of
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(13) GOOD FAITH. Honesty in fact and the observance of
reasonable commercial standards of fair dealing.
(14) INSIDER. Includes:
a. In the case of an individual:
1. A relative of the individual;
2. A partnership or limited liability company in which
the individual is a general partner or managing member; or
3. An organization of which the individual is a
director, officer, or person in control;
b. In the case of an organization:
1. A director, officer, manager, or other person in
control of or with controlling equity interest in the
organization;
2. A partnership or limited liability company in which
the organization is a general partner or managing member;
3. A general partner or managing member of the
organization; or
4. A relative of a general partner, managing member,
director, officer, manager, or other person in control of or
with controlling equity interest in the organization;
c. An affiliate; or
d. A managing agent of an organization.
(15) LIEN. An interest in an asset that secures payment
or performance of an obligation.
(16) ORGANIZATION. A person other than an individual.
(17) PERFECTED LIEN. Includes:
a. A lien on real property other than fixtures on which
a bona fide purchaser of the property cannot acquire an
interest superior to the interest of the lienholder; or
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interest superior to the interest of the lienholder; or
b. A lien on fixtures or property other than real
property on which a creditor cannot acquire a lien by
attachment, levy, or the like that is superior to the interest
of the lienholder.
(18) PERSON. An individual, estate, for-profit or
nonprofit entity, government or governmental subdivision,
agency, instrumentality, or other legal entity. The term
includes a protected series, however denominated, of an entity
if the protected series is established under law that limits,
or limits if conditions specified under law are satisfied, the
ability of a creditor of the entity or of any other protected
series of the entity to satisfy a claim from assets of the
protected series.
(19) PROOF OF CLAIM. A record a creditor submits to an
assignee to evidence the creditor's claim.
(20) RECORD. Information:
a. Inscribed on a tangible medium; or
b. Stored in an electronic or other medium and
retrievable in perceivable form.
(21) RELATIVE. An individual related by affinity or
consanguinity within the third degree or a cohabitant.
(22) SECURITY INTEREST. A lien created by an agreement.
(23) SEND. In connection with a record or notification,
means:
a. To deposit in the mail, deliver for transmission, or
transmit by any other usual means of communication, with
postage or cost of transmission provided for, addressed to any
address reasonable under the circumstances; or
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address reasonable under the circumstances; or
b. To cause the record or notification to be received
within the time the record or notification would have been
received if properly sent under paragraph a.
(24) SIGN. With present intent to authenticate or adopt
a record, means:
a. Execute or adopt a tangible symbol; or
b. Attach to or logically associate with the record an
electronic symbol, sound, or process.
(25) STATE. A state of the United States, the District
of Columbia, Puerto Rico, the United States Virgin Islands, or
any other territory or possession subject to the jurisdiction
of the United States. The term includes a federally recognized
Indian tribe.
(26) TRANSFER. Disposing of or parting with an asset or
with an interest in an asset, regardless of whether the
disposition or parting is indirect, conditional, or
involuntary.
Section 3. Scope.
This act applies to an assignment made by an assignor
that is:
(1) An organization whose principal place of business
is in this state;
(2) An organization whose internal affairs are governed
by the law of this state;
(3) An individual whose principal residence is in this
state;
(4) An organization wholly owned, directly or
indirectly, by an assignor that satisfies subdivision (1),
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indirectly, by an assignor that satisfies subdivision (1),
(2), or (3); or
(5) An organization that:
a. Is partly owned, directly or indirectly, and
controlled by an assignor that satisfies subdivision (1), (2),
or (3);
b. Has no place of business or employees; and
c. Relies on the services the organization receives
from an assignor that satisfies subdivision (1), (2), or (3).
Section 4. Requirements for assignee and assignment
agreement.
(a) An assignee must be a person that:
(1) Is not a creditor, affiliate, or insider of the
assignor;
(2) Is not an affiliate or insider of a creditor of the
assignor;
(3) Does not have a claim against the assignment
estate, other than a claim for fees and expenses to be paid
under the assignment agreement;
(4) Does not have a material financial interest in the
outcome of the assignment, other than fees and expenses to be
paid under the assignment agreement;
(5) Does not hold an equity interest in the assignor
other than a noncontrolling interest in a publicly traded
company; and
(6) Is not an affiliate of a person that fails to
satisfy subdivision (1), (2), (3), (4), or (5).
(b) A person that satisfies subsection (a) is not
precluded from being an assignee merely because the person
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precluded from being an assignee merely because the person
performed services for the assignor before the assignment.
(c) An assignment agreement must be in a record signed
by the assignee and the assignor. The record must:
(1) State the name and address of the assignor and of
the assignee;
(2) Transfer or provide for a transfer of all the
assignor's assets;
(3) Describe the assigned assets in sufficient detail
to identify the assets;
(4) Provide for the distribution of the assignment
estate;
(5) Describe the fees to be charged by the assignee in
connection with the assignment, including the basis on which
they are to be calculated; and
(6) Include a representation by the assignor, under
penalty of perjury, that the assignor is assigning all the
assignor's assets.
(d) If an assignee relies in good faith on the
assignor's representation made under subdivision (c)(6), all
the assignor's assets are deemed to be assigned, even if the
representation is inaccurate.
Section 5. Effect of assignment; when assignment
effective.
(a) An assignee obtains the rights, title, and
interests of the assignor in the assigned assets.
(b) Unless the assignor is an individual, an assignee
obtains the rights, title, and interests of the assignor in
assets acquired after the assignment.
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assets acquired after the assignment.
(c) Except as provided in Section 10(b)(12), an
assignee takes each assigned asset subject to an existing
interest in the asset held by another person.
(d) An assignee holds the assigned assets subject to
the assignee's duties under Section 9.
(e) An assignment is subject to other law under which
the assignment may be fraudulent or otherwise voidable.
(f) The effective date of the assignment agreement is
the date the assignment agreement is signed by the last party
to the assignment agreement which is required to sign the
assignment agreement unless a later date is identified in the
assignment agreement as the effective date.
Section 6. Filing, recording, and title transfer
requirements.
(a) In this section, "financing statement" has the
meaning in Section 7-9A-102(a)(39).
(b) An assignee of a legal or equitable interest in
personal property may file a financing statement in the filing
office of:
(1) This state established for purposes of Section
7-9A-501(a)(2);
(2) Any other state in which:
a. The assignor would be located under Section 7-9A-307
if the assignor were a debtor for the purpose of that section;
or
b. An asset of the assignment estate may be located.
(c) A financing statement filed under subsection (b)
must indicate that the financing statement is filed in
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must indicate that the financing statement is filed in
connection with an assignment.
(d) When filing a financing statement under subsection
(b), the assignee must:
(1) Attach a copy of the assignment agreement to each
financing statement filed; or
(2) State on the financing statement that a copy of the
assignment agreement is available on request to the assignee.
(e) A financing statement filed under subsection (b)
may:
(1) Designate the assignor as "debtor" and the assignee
as "secured party"; or
(2) Use the terms "assignor" and "assignee" or words of
similar import.
(f) The filing of a financing statement under
subsection (b) is not itself a factor in determining whether
an asset secures an obligation. The rights of the assignee
under the assignment are not affected if the assignee does not
file a financing statement under subsection (b).
(g) An assignee of an estate that includes a legal or
equitable interest in real property shall record the
assignment of the interest or notice of the assignment under
the real estate recording law of the jurisdiction where the
property is located.
(h) An assignee shall comply with other law governing
the transfer of title to an asset.
(i) By signing an assignment agreement, the assignor
authorizes the assignee to take the actions required by this
section.
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section.
Section 7. Notification to creditors.
(a) Unless a creditor waives the right to notification
in a signed record, an assignee shall send a notification of
the assignment to each creditor known to the assignee within a
reasonable time not to exceed 30 days after the effective date
of the assignment agreement.
(b) The notification must:
(1) Be in a record signed by the assignee;
(2) Include the assignee's name, address, and other
contact information reasonably necessary to communicate with
the assignee;
(3) Provide reasonable instructions for submitting a
proof of claim using the method established by the assignee
under Section 9(b)(5); and
(4) Identify the date established under Section 9(b)(6)
by which each creditor whose claim is not otherwise allowed
without a timely proof of claim under this act must submit a
proof of claim to the assignee.
(c) An assignee shall use reasonable means to provide
the information in subsection (b) to unknown creditors,
including by any means the assignor regularly used to:
(1) Provide information to the assignor's creditors; or
(2) Communicate information about the assignor, other
than advertising, to the public.
Section 8. Duties of assignor.
(a) Subject to Section 23, an assignor has a duty to
take all reasonable actions necessary for the assignee to
administer the assignment, the assigned assets, and the
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administer the assignment, the assigned assets, and the
assignment estate.
(b) In furtherance of the duty under subsection (a),
the assignor shall:
(1) Preserve and turn over to the assignee the assigned
assets in the assignor's possession or control;
(2) Identify and provide to the assignee information
reasonably necessary to administer the assignment and the
assigned assets;
(3) Sign, and comply with any notarization required
under other law, any record reasonably necessary to transfer
an assigned asset;
(4) Provide the assignee with the name, address, and
other contact information reasonably necessary to communicate
with an appropriate person willing and able to act as a
representative on behalf of the assignor as may be reasonably
necessary to administer the assignment, the assigned assets,
and the assignment estate;
(5) If the assignment includes a legal or equitable
interest in real property or titled personal property,
cooperate with the assignee in taking actions under Section 6;
(6) On or as soon as practicable after the effective
date of the assignment agreement, provide the assignee a list
of all assets, a list of all the assignor's employees
including those whose employment is terminated in connection
with the assignment, and a list of all the assignor's known
creditors including, for each creditor, the creditor's address
and other contact information reasonably necessary to
communicate with the creditor;
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communicate with the creditor;
(7) Verify under penalty of perjury the accuracy of the
lists required under subdivision (6);
(8) With respect to a legal or equitable interest in
property restricted from assignment, cooperate with the
assignee to obtain consent from a person whose consent to
assign the interest is necessary under other law; and
(9) Provide assistance to the assignee as required by
the assignment agreement.
(c) The duties in this section also apply to a
representative identified in subdivision (b)(4).
Section 9. Duties of assignee.
(a) Subject to Section 23, an assignee has a fiduciary
duty to the assignment estate for the benefit of creditors:
(1) Of loyalty, including the duty to manage the
assignment in good faith;
(2) To use reasonable care to maximize distributions
under Section 15; and
(3) To wind up the assignment under Section 19 in a
manner compatible with the best interests of the assignment
estate and creditors.
(b) Without limitation on the duties under subsection
(a), and subject to Section 23, the assignee shall also have a
duty to:
(1) Maintain a separate deposit account for funds
related to the assignment;
(2) Collect on or dispose of each assigned asset,
unless the assignee determines it is more economically
efficient to abandon the asset;
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efficient to abandon the asset;
(3) Prepare and retain appropriate business records,
including a record of each receipt, disbursement, and
collection on or disposition of an assigned asset;
(4) Pay administrative expenses of the assignment
estate, to the extent the assignment estate has sufficient
unencumbered assets;
(5) Establish a method that is reasonably designed to
permit a creditor to submit a proof of claim;
(6) Establish a single date by which creditors whose
claims are not otherwise allowed without timely proofs of
claim under this act must submit proofs of claim, which must
be not less than 90 and not more than 210 days after the
effective date of the assignment agreement;
(7) Unless a claim would receive minimal or no
distribution without regard to its validity or asserted
priority, examine the validity and priority of claims against
the assignment estate and, if necessary, consult with the
assignor's representative designated under Section 8(b)(4), if
any;
(8) At least every six months, provide to each creditor
a summary of the assets, liabilities, and expenses of the
assignment estate, and a status report that provides in
summary form actions taken to liquidate assets and plans of
distribution;
(9) Comply with all requirements of the Internal
Revenue Service and state and local taxing authorities;
(10) Send a notification to each creditor of the
assignee's compensation and any change in the method of
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assignee's compensation and any change in the method of
determining the assignee's compensation from the method
provided in the assignment agreement;
(11) Send a final accounting under Section 19(a); and
(12) Comply with the other requirements imposed on the
assignee under this act.
Section 10. Powers of assignee.
(a) An assignee has the powers necessary or appropriate
to perform the assignee's duties.
(b) Unless the assignment agreement expressly provides
otherwise, the assignee has power to:
(1) Operate an existing business that uses an assigned
asset, including preservation of the asset and collection on
or the sale, lease, license, or other disposition of the
asset;
(2) Incur secured or unsecured debt and pay expenses
incidental to the exercise of the power under subdivision (1);
(3) Assert a right, claim, cause of action, or defense
the assignor could have asserted that relates to the
assignment estate;
(4) Engage professionals, including a professional
previously engaged by the assignor, to give advice, to
prosecute or defend litigation, or for other purposes as the
assignee considers appropriate, and pay the professional a
reasonable fee for services from the assignment estate;
(5) Collect on or sell, lease, license, or otherwise
dispose of an asset of the assignment estate whether or not
subject to a lien or other encumbrance;
(6) Exercise a right to redeem an asset of the
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(6) Exercise a right to redeem an asset of the
assignment estate which is subject to a mortgage, deed of
trust, security interest, or other encumbrance;
(7) Settle a matter involving a debtor of the assignor;
(8) Prosecute or defend a litigation pending on the
effective date of the assignment agreement in favor of or
against the assignor in the manner and with the same effect as
the assignor could have done if an assignment had not been
made;
(9) Recover an asset in the manner and with the same
effect as the assignor might or could have done if an
assignment had not been made;
(10) Settle claims against the assignment estate;
(11) Abandon an assigned asset;
(12) Subject to subsections (c) and (e), avoid a
transfer or the incurrence of an obligation a creditor that
has filed a proof of claim could have avoided under other law
if the assignment had not occurred; and
(13) Invest funds, subject to applicable prudent
investor standards under other law.
(c) The power under subdivision (b)(12) is exclusive to
the assignee with respect to a creditor that submits a proof
of claim. A recovery by the assignee in the exercise of this
power must be for the benefit of the assignment estate but may
not exceed the amount, asset, or other value the creditor
could have obtained by the avoidance.
(d) For the purpose of exercising the assignee's power
under subdivision (b)(12), exercising a voidable-transaction
remedy, or otherwise establishing the priority of the
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remedy, or otherwise establishing the priority of the
assignee's interest, an assignee has a lien on the assignment
estate and the status of:
(1) A lien creditor under Section 7-9A-102(a)(52)(B) as
to an asset that is a legal or equitable interest in personal
property or fixtures;
(2) A bona fide purchaser under Section 35-4-90, Code
of Alabama 1975, as to an asset that is a legal or equitable
interest in non-fixture real property located in this state;
and
(3) A bona fide purchaser under the law of another
state as to an asset that is a legal or equitable interest in
non-fixture real property located in the other state.
(e) An assignee's power under subdivision (b)(12) to
avoid a transfer made before the effective date of the
assignment agreement, under or in connection with a swap
agreement, securities contract, commodity contract, forward
contract, repurchase agreement, or master netting agreement is
limited to the extent a trustee would not have the power to
avoid the transfer under the Bankruptcy Code, 11 U.S.C. § 101
et seq.
(f) An assignee shall exercise the powers under this
section consistent with the assignee's fiduciary duty under
Section 9(a).
Section 11. Allowed claim.
(a) An assignee shall allow a creditor's claim if:
(1) The creditor submits a proof of claim in compliance
with Section 13; and
(2) The assignee does not dispute the claim under
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(2) The assignee does not dispute the claim under
Section 12 before final distribution.
(b) An assignee may:
(1) Allow a claim, pay a known liquidated claim, or
accept a notice to the assignee of a claim received by the
date established by the assignee under Section 9(b)(6) even if
the creditor does not submit a proof of claim; or
(2) Allow and pay a claim evidenced by a late-filed
proof of claim, if the assignee determines there is a
reasonable basis for excusing the late filing.
(c) Any unsecured portion of an allowed claim shall be
valued as of the effective date of the assignment agreement.
(d) A creditor's claim is allowed if the creditor
succeeds in a dispute under Section 12(b).
(e) Subject to subsection (f), after expiration of the
time for submitting a proof of claim, the assignee shall
create a complete list of creditors that have submitted a
proof of claim in compliance with Section 13. For each
creditor's claim, the list must:
(1) State the amount of the claim, if the amount is
known to the assignee; and
(2) State whether the claim is secured or unsecured
and, if secured, describe the collateral for the claim.
(f) If a class of creditors will receive no
distribution on account of allowed claims, the assignee shall
send a notice in a record to each creditor in that class that
the creditor will receive no distribution instead of the list
required in subsection (e).
(g) Upon request, the assignee shall provide the list
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(g) Upon request, the assignee shall provide the list
created under subsection (e) to a creditor or other party with
an interest in the assignment estate to the extent permitted
by privacy laws and subject to any privacy safeguards the
assignee determines in the assignee's business judgment are
reasonably necessary.
Section 12. Disputed and disallowed claims.
(a) An assignee may dispute a creditor's claim before
final distribution by sending notice in a record stating the
nature of the assignee's dispute to the creditor.
(b) If a dispute cannot be resolved consensually, the
assignee may commence a proceeding to disallow the claim under
Section 21. The assignee must commence the proceeding before
final distribution under Section 15. If the proceeding is not
filed before final distribution, the assignee shall allow the
claim under Section 11.
(c) An assignee shall create a dollar-for-dollar
reserve for the estimated amount of the potential distribution
on a disputed claim.
(d) Subject to subsection (b), an assignee shall
disallow a claim for reimbursement or contribution of a person
that is liable with the assignor on, or that has secured, the
claim, to the extent:
(1) The claim against the assignment estate is
disallowed;
(2) The claim for reimbursement or contribution is
contingent as of the time of allowance or disallowance; or
(3) The person asserts a right of subrogation to the
rights of a creditor.
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rights of a creditor.
(e) A claim for reimbursement or contribution of a
person liable with the assignor on, or that has secured, the
claim that becomes fixed after the effective date of the
assignment agreement shall be determined, and shall be allowed
or disallowed, subject to subsection (b), as if the claim had
become fixed before the effective date of the assignment
agreement.
(f) An assignee may reconsider the assignee's decision
to allow or disallow a claim for cause. If a reconsidered
claim is allowed under Section 11, before the assignee makes
additional payments or transfers to other creditors that are
equal or junior in priority under Section 15 to the
reconsidered claim, the creditor with the reconsidered claim
shall receive a payment or transfer in an amount proportionate
in value to the payments or transfers already received by the
other creditors. This subsection does not modify the
assignee's right under other law to recover from a creditor an
excess payment or transfer made to the creditor. If a
reconsidered claim is disallowed, the assignee must comply
with subsections (b) and (c).
Section 13. Proof of claim.
(a) A proof of claim must:
(1) State the name, address, and other contact
information reasonably necessary to communicate with the
creditor;
(2) State the amount of the claim;
(3) Briefly state the nature of the claim;
(4) Identify any asset of the assignment estate
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(4) Identify any asset of the assignment estate
securing the claim;
(5) Be signed by the creditor under penalty of perjury;
(6) Include a copy of a record, if any, on which the
claim is based;
(7) Be submitted using the method established under
Section 9(b)(5); and
(8) Be submitted by the date established by the
assignee under Section 9(b)(6).
(b) A proof of claim submitted in compliance with this
section is prima facie evidence of the validity and amount of
the claim.
(c) The submission by a creditor of a proof of claim in
compliance with this section constitutes the creditor's:
(1) Consent to the jurisdiction of the court specified
in Section 21; and
(2) Assignment to the assignee of any right of the
creditor to bring a voidable transaction action relating to
the creditor's claim.
Section 14. Rights of transferees.
(a) An assignee's disposition of assets:
(1) Transfers to a transferee for value all of the
assignee's rights in the assets;
(2) Discharges the assignee's lien as a lien creditor
and, to the extent the assignment creates a security interest
in favor of the assignee, the assignee's security interest;
and
(3) Discharges any subordinate security interest or
other lien subordinate to the assignee's lien.
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other lien subordinate to the assignee's lien.
(b) A transferee that acts in good faith takes free of
the rights and interests described in subsection (a), even if
the assignee fails to comply with this act or the requirements
of a judicial proceeding.
(c) If a transferee does not take free of the rights
and interests described in subsection (a), the transferee
takes the asset subject to:
(1) The assignee's rights in the assets of the
assignment estate;
(2) The assignee's lien and, if applicable, security
interest; and
(3) Any other security interest or other lien.
(d) Unless otherwise provided in a record, any warranty
arising by operation of other law is disclaimed to the extent
permitted by other law.
(e) If a subordinate security interest or other lien is
discharged under this section, the assignee may file a record
with the official or office responsible for maintaining an
official filing, recording, registration, or
certificate-of-title system covering the collateral secured by
the security interest or other lien. The record must state
that the security interest or other lien is discharged as a
subordinate security interest or other lien in connection with
a disposition under an assignment for the benefit of creditors
of the debtor whose property is subject to the security
interest or other lien.
Section 15. Distributions.
(a) In this section, "protected secured creditor" means
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(a) In this section, "protected secured creditor" means
a secured creditor whose lien:
(1) Is a perfected lien;
(2) Cannot be avoided by the assignee under Section
10(b)(12); and
(3) Is not subordinate to the lien of the assignee.
(b) Except as provided in Section 16, the assignee
shall pay claims from the assignment estate allowed under
Section 11 in the order of priority stated in this section.
(c) Unless otherwise agreed between the assignee and a
protected secured creditor, before distributions are made
under subsections (d), (e), (f), and (g), and in accordance
with the priorities of creditors with liens under other law,
the protected secured creditor shall receive the asset or the
proceeds from the collection on or disposition of the asset to
the extent of the value of the protected secured creditor's
interest in the asset, less the assignee's reasonable and
necessary expenses of preserving or disposing of the asset to
the extent the expenses benefit the protected secured creditor
and are incurred with the protected secured creditor's consent
or acquiescence. The protected secured creditor has an
unsecured claim under subdivision (g)(2) for the amount of the
claim that remains after deducting the amount or value of an
asset the protected secured creditor receives under this
subsection. To the extent a claim is secured by property the
value of which, after the deductions provided under this
subsection, is greater than the amount of the claim, the
protected secured creditor may receive interest on the claim
and any reasonable fees, costs, or charges provided for under
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and any reasonable fees, costs, or charges provided for under
the assignment agreement or other law under which the claim
arose.
(d) After the distributions under subsection (c), the
assignee shall pay the necessary costs of the administration
of the assignment estate. The costs include:
(1) Fees and reimbursements of the expenses of the
assignee and any professionals employed by the assignee;
(2) Post-assignment taxes incurred by the assignee;
(3) Post-assignment rent incurred by the assignee in
occupying premises on which assets of the assignment estate
are located or the business of the assignor is conducted;
(4) Post-assignment lease payments incurred by the
assignee in renting personal property used in the business of
the assignor; and
(5) Amounts required to be paid under the assignment
agreement for expenses of winding up the assignment under
Section 19.
(e) After the distributions under subsections (c) and
(d), the assignee shall pay claims entitled to priority under
federal law including under 31 U.S.C. § 3713, from the
assignment estate.
(f) After the distributions under subsections (c), (d),
and (e), the assignee shall pay claims from the assignment
estate for wages, salaries, or commissions earned not more
than 180 days before the earlier of the effective date of the
assignment agreement or the cessation of the assignor's
business. Payment shall be limited to the greater of:
(1) The amount of the claim allowed as a priority claim
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(1) The amount of the claim allowed as a priority claim
ahead of claims of other unsecured creditors under the
Bankruptcy Code, 11 U.S.C. § 101 et seq.; or
(2) The amount allowed as a priority claim ahead of
claims of other unsecured creditors under applicable
non-bankruptcy law.
(g) After the distributions under subsections (c), (d),
(e), and (f), each creditor shall receive a distribution of
the assets of the assignment estate in the following order of
priority:
(1) Unsecured claims entitled to priority ahead of
claims of other unsecured creditors under other law; and
(2) Unsecured claims not entitled to priority.
(h) If the assets available for distribution to claims
with equal priority under subsection (g) are insufficient to
pay the total amount of the claims with that priority, each
creditor with a claim with that priority shall receive a pro
rata distribution of the available assets based on the
proportion the amount of the creditor's claim bears to the
total amount of the claims with that priority.
(i) If the claims entitled to the distribution under
subsections (c), (d), (e), (f), and (g) are paid in full, the
residue shall be distributed to allowed claims evidenced by a
late-filed proof of claim, other than a late-filed claim
allowed by the assignee under Section 11(b)(2), and, after the
allowed claims evidenced by a late-filed proof of claim have
been paid in full, as provided in the assignment agreement.
(j) An assignee may make interim distributions after
considering future expenses and the reserves for disputed
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considering future expenses and the reserves for disputed
claims established under Section 12(c).
Section 16. Claim subordination.
(a) A subordination agreement is enforceable under this
act to the same extent the agreement is enforceable under
other law.
(b) Subject to subsection (c), the following claims are
subordinate to a claim or interest that is senior or equal in
priority to a claim or interest represented by a security or
other equity interest in the assignor or an affiliate of the
assignor:
(1) A claim arising from rescission of a purchase or
sale of the security or other equity interest; and
(2) A claim for damages arising from the purchase or
sale of the security or other equity interest or for
reimbursement or contribution on the claim.
(c) If the security is common stock or another common
equity interest, a claim subject to subordination under
subsection (b) has the same priority as common stock or
another common equity interest.
Section 17. Liability.
(a) An assignor is not personally liable for an act or
omission by the assignee.
(b) An assignee is not personally liable for an act or
omission by the assignor.
(c) If an assignor designates a representative that may
act on behalf of the assignor under Section 8(b)(4), the
representative is exculpated to the same extent as a person
acting on behalf of the assignor under other law had there
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acting on behalf of the assignor under other law had there
been no assignment, except for an act or omission resulting
from the representative's gross negligence or willful
misconduct.
(d) A term of an assignment agreement relieving the
assignee of liability is unenforceable to the extent the
agreement relieves the assignee of liability for an act or
omission committed in bad faith or with reckless indifference
to the purposes of the assignment or the interests of the
creditors of the assignment estate.
(e) Subject to subsection (f), an assignee is
personally liable for breach of a fiduciary duty under Section
9(a). If the assignee is liable:
(1) The assignee is personally liable to a creditor for
an individualized harm to the creditor, if the harm is not
shared by all creditors or a class of creditors; and
(2) The assignee is personally liable to the assignment
estate for a harm shared by all creditors or a class of
creditors.
(f) An assignee is not liable if, in the performance of
the assignee's duties and exercise of the assignee's powers,
the assignee relies in good faith on:
(1) A record of the assignor;
(2) Information, an opinion, a report, or a statement
presented to the assignee by the assignor's officer or
employee, a committee of the assignor's board of directors, an
independent director or manager of the assignor, or another
representative of the assignor; or
(3) Information, an opinion, a report, or a statement
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(3) Information, an opinion, a report, or a statement
presented to the assignee by another person that has been
selected with reasonable care by or on behalf of the assignee
as to a matter the assignee reasonably believes is within the
other person's professional or expert competence.
Section 18. Assignee removal; successor assignee.
(a) The assignor or a creditor may request the circuit
court to remove the assignee if the assignor or creditor has a
reasonable belief grounds for removal exist under subsection
(b).
(b) After a request under subsection (a) or on the
court's initiative in an action pending before the court under
Section 21, the court may remove an assignee:
(1) For cause, including the assignee's fraud,
dishonesty, incompetence, gross mismanagement, or failure to
comply with this act; or
(2) If removal of the assignee best serves the
interests of the creditors.
(c) After an assignee resigns, or is removed, dies, or
becomes incapacitated, a successor assignee provided for in
the assignment agreement becomes the assignee unless the
successor assignee is not eligible to be an assignee under
Section 4(a) or is subject to removal under subsection (b). A
court shall appoint a successor assignee if:
(1) The assignment agreement does not provide for a
successor assignee; or
(2) The successor assignee provided for in the
assignment agreement is ineligible to be an assignee under
Section 4(a) or is subject to removal under subsection (b).
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Section 4(a) or is subject to removal under subsection (b).
(d) Subject to Section 17, an assignee that resigns, or
is removed, dies, or becomes incapacitated, is discharged from
the assignee's duties under this act when the assignee, or a
representative of a deceased or incapacitated assignee:
(1) Accounts for and turns over to the successor
assignee all assets of the assignment estate; and
(2) Submits to creditors a report summarizing the
receipts and disbursements made during the service of the
assignee.
(e) Subject to an applicable privilege, a court may
order an attorney, accountant, or other person that has
information in a record relating to the assignment estate or
the assignor's financial affairs to turn over or disclose the
record to the successor assignee.
Section 19. Winding up.
(a) On completion of an assignee's duties, the assignee
shall send a creditor whose claim is allowed under Section 11,
and not satisfied in full, a final accounting sufficient to
inform the creditor of all material aspects of the assignment,
including:
(1) A description of the actions taken by the assignee
under the assignment;
(2) A summary of the assets received by the assignee at
the commencement of the assignment and the assets received by
the assignee during the assignment;
(3) A summary of disbursements made by the assignee
during the assignment for the purpose of administering the
assignment estate, including the fees charged by the assignee,
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assignment estate, including the fees charged by the assignee,
and payments to professionals, for rent, and for business
purchases;
(4) A summary of collections and dispositions of assets
by the assignee;
(5) A summary of distributions made or proposed to be
made by the assignee for creditor claims;
(6) A description of additional work to be done by the
assignee to complete the administration of the assignment
estate and the distributions under Section 15; and
(7) Other information considered reasonably necessary
by the assignee.
(b) Except as otherwise provided in the final
accounting or if the assignee has not fulfilled the assignee's
duties under this act, the assignee is discharged from the
assignee's duties under this act when the assignee sends the
final accounting and distributes all the assets of the
assignment estate.
(c) If the final accounting describes additional work
under subdivision (a)(6), the assignee shall exercise the
powers appropriate to complete the work.
Section 20. Interstate matters.
(a) Subject to subsection (b), an assignment made under
the law of another state must be recognized and enforced on an
issue if the result for the issue would be substantially
similar to the result for the issue if the assignment had been
made under this act.
(b) If a claim for wages, salaries, or commissions or a
governmental claim exists in another state, for the purpose of
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governmental claim exists in another state, for the purpose of
determining the priority of the claim under Section 15(f)(2),
the assignee shall use the amount asserted or determined under
the law of the other state.
(c) If an assignee determines that a creditor should
receive the treatment the creditor would receive under an
assignment made under the law of another state, the assignee
may treat the creditor as the creditor would be treated in the
other state.
Section 21. Court action.
(a) The circuit court may hear and resolve a matter
involving the administration of an assignment or the exercise
of an assignee's powers and duties, including a request for
instructions or approval or to declare rights.
(b) Without limiting the rights of the assignee or a
creditor or other interested person to request the court to
hear or resolve a matter under subsection (a), on request of
the assignee, the court may issue an order relating to the
administration of the assignment or the exercise of the
assignee's powers and duties, including an order for
disposition of an asset or the incurrence of an obligation.
(c) Acceptance of the assignment by the assignee
constitutes the assignee's consent to the jurisdiction of the
court.
Section 22. Ancillary assignee.
(a) Subject to other law of this state governing a
person from another state serving as a fiduciary in this
state, the circuit court may appoint a person serving as an
assignee in an assignment in another state, or the person's
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assignee in an assignment in another state, or the person's
nominee, as an ancillary assignee relating to assigned assets
located in this state or subject to the jurisdiction of a
court in this state, if:
(1) The person or nominee would be eligible to serve as
an assignee under Section 4; and
(2) The appointment furthers the person's possession,
custody, control, or disposition of an assigned asset under
the assignment in the other state.
(b) The court may issue an order that implements an
order entered in another state appointing or directing an
assignee or otherwise concerning an assignment in the other
state.
(c) Unless the court orders otherwise, an ancillary
assignee appointed under subsection (a) has the rights,
powers, and duties of an assignee appointed under this act.
(d) A person in possession, custody, or control of an
assigned asset in this state, other than a creditor holding a
lien or a right of setoff or recoupment relating to the asset,
on notification in a record by an ancillary assignee appointed
under subsection (a), shall turn the asset over to the
ancillary assignee.
Section 23. Provisions variable by agreement.
(a) Except as provided in this section and Section
10(b), this act may not be varied by agreement.
(b) The duties under Sections 8(a) and 9(a) may not be
disclaimed by agreement. An assignor and the assignee may
determine by agreement the standards measuring the fulfillment
of the duties of the assignor under Section 8 and the assignee
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of the duties of the assignor under Section 8 and the assignee
under Section 9 if the standards are not manifestly
unreasonable.
(c) Except as provided in Section 17(d), the assignment
agreement may limit the assignee's liability under Section 17
and may require the assignee be indemnified by the assignment
estate.
(d) Except as provided under Section 7(a), whenever
this act requires an action to be taken within a reasonable
time, a time not manifestly unreasonable may be fixed by
agreement.
(e) The assignment agreement may provide for duties of
the assignee in addition to those in this act.
Section 24. Uniformity of application and construction.
In applying and construing the Uniform Assignment for
Benefit of Creditors Act, a court shall consider the promotion
of uniformity of the law among states that enact this uniform
act.
Section 25. Relation to electronic signatures in global
and national commerce act.
This act modifies, limits, or supersedes the Electronic
Signatures in Global and National Commerce Act, 15 U.S.C. §
7001 et seq., but does not modify, limit, or supersede 15
U.S.C. § 7001(c), or authorize electronic delivery of any of
the notices described in 15 U.S.C. § 7003(b).
Section 26. Transitional provision.
This act applies to an assignment made on or after
October 1, 2026.
Section 27. This act shall become effective on October
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Section 27. This act shall become effective on October
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1, 2026.
________________________________________________
President and Presiding Officer of the Senate
________________________________________________
Speaker of the House of Representatives
SB15
Senate 10-Feb-26
I hereby certify that the within Act originated in and passed
the Senate, as amended.
Patrick Harris,
Secretary.
House of Representatives
Passed: 07-Apr-26
By: Senator Givhan
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