Providing for an assignment of assets for the benefit of creditors, exempting the related tax on the transfer of real estate, and including effective date provisions

The process is governed under state law as an alternative to a federal bankruptcy proceeding. DIVISION I —— BILL’S PRINCIPAL PROVISIONS —— TERMINOLOGY. Under the bill, the person seeking to liquidate assets is referred to as an assignor and the fiduciary is referred to as the assignee. The assignor and assignee act in accordance with an assignment agreement entered into by the parties. Therefore, the liquidation is governed by agreement rather than by court order. An assigned asset refers to an asset transferred under an assignment agreement. An assigned asset includes any legal or equitable interest in the property of an assignor, regardless of whether the assignor is in possession or control of the property. The transferred assets covered under the assignment agreement becomes part of an assignment estate administered by the assignee for the benefit of creditors. A creditor’s proof of claim refers to a record required to be submitted to an assignee by a creditor that evidences the creditor’s claim to an assigned asset. A person is considered a protected secured creditor if the person holds a perfected lien that cannot be avoided by the assignee and is superior to the assignee’s lien. DIVISION I —— BILL’S PRINCIPAL PROVISIONS —— POWERS AND DUTIES OF THE ASSIGNOR, ASSIGNEE, AND CREDITORS. The assignor has the duty to cooperate with the assignee to assist in administering the assignment estate. The assignor must provide the assignee a list of the assigned assets, together with creditor and employee information. The assignee must notify creditors known to the assignee of the assignment. An assigned asset is subject to any existing lien or security interest that is not capable of being avoided by the assignee. A transfer of assets is presumably governed under the “Uniform Voidable Transactions Act” (Code chapter 684)., to operate the assignor’s business, incur debt, pay expenses, and assert or defend claims related to administering the assigned estate). The assignee may also avoid certain claims that the assignor could have avoided if there had not been an assignment agreement. The assignee is deemed to be a lien creditor against the assigned assets consisting of personal property and fixtures and a bona fide purchaser of assigned assets consisting of nonfixture real estate., evidence of fraud, dishonesty, incompetence, or gross mismanagement). DIVISION I —— BILL’S PRINCIPAL PROVISIONS —— DISTRIBUTIONS TO CREDITORS AND WINDING UP THE ASSIGNMENT ESTATE. A creditor must file proof of a claim with the assignee as required by the assignee. The assigned assets in the assignment estate are distributed to creditors whose proof of a claim is accepted by the assignee in accordance with scheduled priorities including by class of creditors., Code chapter 554, article 9). A creditor holding priority status includes protected secured creditors and the assignee who has a lien on the assignment estate for payment of the assignee’s fees and expenses. If there are not sufficient moneys to pay creditors with equal priority in full, the assignee must distribute the moneys to those creditors on a pro rata basis. The assignee may also establish reserve moneys for disputed claims to be determined in district court, and for winding up the assignment estate. After the assignee has distributed all of the assets of the assignment estate to creditors, the assignee must send a final accounting to the creditors. The assignee is then discharged from the assignee’s duties. DIVISION II —— BILL’S COORDINATING AMENDMENTS.10(7)(c)). The bill replaces those references with references to Code chapter 681A.8102(122)).2). Under current law, there is no similar exemption. DIVISION III —— BILL’S EFFECTIVE DATE. The bill takes effect January 1, 2027.