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Rust Restructuring Assignment Definition

A general assignment or assignment is a concept in bankruptcy law that has a similar meaning, due to common law ancestry, in different jurisdictions, but wide dispersion in practical application. The "assignment for the benefit of creditors", also known as an ABC or AFBC is an alternative to bankruptcy, which is a "general assignment"/"assignment" concept.

The United States[edit]

In the United states, a general assignment or an assignment for the benefit of creditors is simply a contract whereby the insolvent entity ("Assignor") transfers legal and equitable title, as well as custody and control of its property, to a third party ("Assignee") in trust, to apply the proceeds of sale to the assignor's creditors in accord with priorities established by law.[citation needed]

An assignment for the benefit of creditors is a relatively well-established common law tool and is one alternative to a bankruptcy. An assignment for the benefit of creditors is designed to save time and expense by concluding the affairs of a bankrupt company. The assignment for the benefit of creditors is a state form of bankruptcy action versus a federal form of bankruptcy action. The assignment for the benefit of creditor’s process is similar in character to a Chapter 7 bankruptcy and parallels some of the same procedures, but is not an actual "bankruptcy" in the form the word is used in the United States.[citation needed]

Mechanism[edit]

The assignment for the benefit of creditors is a common law contract between the board of directors and the assignee in which the board "assigns" the assets and liabilities of the company to the assignee, a third party. The assignment for the benefit of creditors contract is usually recorded the public record at a town, a city, a county or a state level. Each state will differ on recording requirements for the assignment for the benefit of creditors contract.[citation needed]

The physical filing of the assignment usually occurs after: the board of directors has spoken with local insolvency counsel; a board of directors authorization of some nature has been enacted; an appropriate assignee chosen; and the contract has been written. The assignee's primary goal is to try to make the creditors whole. The assignee performs duties similar to a trustee under federal bankruptcy. The assignee has a similar, if not equivalent, fiduciary role as the bankruptcy trustee. The assignee has the primary responsibility to: liquidate the assets of the company; vette creditor claims; and issue a dividend to the creditors. The creditors are the assignee's top priority, not shareholders. Shareholders by definition have a residual claim on assets once all creditors are satisfied.[citation needed]

The assignee, once the assignment process is completed, issues a dividend. The dividend is derived from the sale of assets, collection of receivables, recovery of the bankrupt company’s assets and cash. Certain creditors may or may not receive a dividend. The assignee's hope is to provide a one-to-one redemption of the creditor’s claims; however, this depends on the amount of cash an assignee can marshal in the liquidation process.[citation needed]

The claims process is similar to a standard bankruptcy action in which creditors submit claims to the assignee for review and acceptance. The acceptance and vetting of claims is an important process to ensure that no one creditor has overstated their claim. There are rare occasions in which an assignee may issue a non-cash dividend as part of the overall dividend to creditors on their claims, but a dividend of this type is not common. If all the creditors are made whole, shareholders would then have a claim on the remainder of the dividend. This holds true only if there are no other classes of equity that have priority senior to the shareholders.[citation needed]

The order of creditor’s claims usually follows the normal bankruptcy order prescribed in a Chapter 7 bankruptcy, generally secured, and unsecured in descending order. The assignee, depending on the specific state law may use Chapter 7, Title 11, United States Code as needed. Neither the federal bankruptcy court nor a state court usually oversee this process, however the assignee is subject in most cases to a look back provision within the state the assignment took place.[citation needed]

A Federal Bankruptcy Court judge in a Chapter 7 bankruptcy must approve the sale of the bankrupt company's assets, thus adding time and expense on to the entire liquidation process. The assets sold in an assignment for the benefit of creditor process do not usually require a judge's intervention. It is this removal of the court from the liquidation process which increases the speed of the assets sold in an assignment process. This is one substantial difference from a regular bankruptcy.[citation needed]

Creditors[edit]

Secured and unsecured creditors constitute the creditor body. Both secured and unsecured creditors are ahead of shareholders as noted earlier. A secured creditor is a creditor, who has a priority claim on an asset or assets of a company. A lien on the specific asset or assets places the secured creditor's claim ahead of the unsecured creditor. Once a secured creditor is satisfied, the unsecured creditor is then the next priority. This is again the normal order of priority in a bankruptcy.[citation needed]

Secured creditor influence[edit]

If there has been a determination by company management and interested parties such as a secured creditor that even after restructuring, a "going concern" may still not viable. A secured creditor or group of secured creditors frequently may encourage the company's senior management to pursue this liquidation mechanism. Secured creditor(s) may encourage this type of action to relieve themselves of the legal costs and risks associated with the foreclosure and sale of its collateral. One specific risk a secured creditor wants to avoid is preference or the perception of preference in the liquidation process (see fraudulent transfer).[citation needed]

In situations where the liquidation value of the assets exceeds a secured creditor's lien, the assignee is not normally required to obtain the consent of a secured creditor or any other creditor prior to the assignment process. Cooperation of the secured creditor may however affect the assignee's ability to liquidate an asset. An assignee in practice may obtain the consent of the secured creditors in advance of the assignment to ensure that the assignee can liquidate the asset or assets in a timely manner without a secured party stopping or holding up the assignment process. Secured party consent in this case is optional, not necessary.[citation needed]

In situations where the liquidation value of the assets is less than a secured creditor's lien, the assignment process can be done, however a vast number of legal questions need to be reconciled before the assignment process can possibly be initiated. There unfortunately is no concise answer in this particular situation.[citation needed]

Secured creditors may in certain instances assume the senior management roles within the bankrupt company, however noted earlier this situation occurs when the secured creditor(s) have foreclosed on their lien. Large secured creditors again may influence the decision making process, but that secured creditor can not enter into that contract on behalf of the bankrupt company. Only the bankrupt company's senior management and/or board of directors have the power to do an assignment.[citation needed]

Dividend[edit]

The dividend is hopefully the payout that the assignee issues, once all creditors' claims have been vetted and all the assets have been sold. The assignee hopes to generate enough cash to provide a one for one redemption of a creditor's claims. This is the hope the reality varies vastly, depending on the price the assets fetched when sold. Most dividends are in the form of cash back to the creditor, but not necessarily all. There may not even be a dividend in certain instance, thus no creditor receives any payment. There is no way to determine the cash value of an asset in the assignment process, regardless of past estimates. Tangible assets cash value can usually, but not always, be reasonably estimated. Intangible assets such as intellectual property or processes are much more difficult to evaluate.[citation needed]

Key attributes of the process[edit]

Noted earlier this is a state form of bankruptcy, not federal form. The assignment process or any bankruptcy process for that matter is a legal matter. The state attributes of an assignment process may be understood by any attorney however a local/regional bankruptcy attorney in the specific state usually is best equipped to handle the legal end of the process for the company making the assignment. This is not asserted to diminish an attorney’s capabilities, but to stress the legal niche that this legal instrument falls within, bankruptcy. Non legal staff familiar with bankruptcy and the assignment process can also affect the speed validity of the process.[citation needed]

General assignment attributes[edit]

The general rule is that any debtor may make an assignment. This would include any individual, partnership, corporation or limited liability company that owes anything to anyone. Any debtor owning property has the common law right to make an assignment.[citation needed]

Other common law countries[edit]

In other common law countries, general assignments usually refer to any general assignment of existing or future book debts by a natural person (including, in some cases, partnerships). A general assignment made by a natural person who is subsequently adjudged bankrupt is void against the trustee in bankruptcy as regards any book debts which have not been paid prior to the presentation of the bankruptcy petition.[citation needed]

The definition of book debts includes "debts which in the ordinary course of business would be entered in a well-kept trade book",[1] future debts and future rents under a hire purchase agreement. Bills of exchange also fall within the definition of book debts,[2] but a bank balance does not.[3]

Under (for example) English law, any general assignment, either absolute or by way of security, of book debts is void unless registered under the Bills of Sale Act 1878. A trustee would not be able to attack an assignment under this section which relates to debts due from specified debtors or debts becoming due under specified contracts or where the debts were assigned as part of a bona fide transfer of a business or the assignment is for the benefit of creditors generally.[citation needed]

References[edit]

  1. ^Re Shipley v Marshall [1863] 4 C.B. 566
  2. ^Re Siebe Gorman v Barclays Bank Plc [1979] 2 Lloyds Rep 142
  3. ^Re Brightlife Ltd [1987] 1 Ch 200

Our vision and highest objective is the customer satisfaction.

The GOiNTERIM partner and interim manager have managed a lot of different and various business situations and economic challenges in the past years. These successful results and experiences are the basis for our successful interim assignments.

Following we chart some of our assignments and interim projects as an example. Additionally we list the feedback and references of some customers for your information.

 

 

 

Based on our experience of over 350 assignments we can Show examples of successful Interim assignments on an international basis. On an international field we can refer to an international Network in over 54 countries worldwide.

 

Managing Director / CEO

 

Managing Director Retail, Austria

60 Mil.€ Sales

Takeover of overall responsibility of a retail company for auto parts, positioning, Setup and international business development, team building and installation of a new corporate culture

 

Interim CEO Manufacturing industry, USA

40 Mio.$ sales

Post-merger integration of a manufacturing company in the U.S.A., corporate restructuring of the site and reorganization, partial relocation to newly acquired subsidiaries of the group.

 

CTO/CRO Automotive supplier, Germany

85 Mil. € sales

Operative management of the production companies in the automotive supply industry, optimization of production processes, adaptation of the organizational structure, business development and turnaround.

 

 

Board of Directors / Special Assignments

 

Supervisory Board Health care, Great Britain

270 Mil. GBP sales

Member of the Supervisory Board of a service company in the healthcare sector, strategic leadership, shaping and implementation of corporate policy, closure and downsizing of non-core areas.

 

 

Advisor to the board Private Equity, Österreich

130 Mio.€ Umsatz

Interim Advisor to the Board of Directors und Investoren, Beratung bei der finanziellen Strukturierung und Verhandlung mit Kreditgebern, Übernahme des Post Acquisition Managements. 

 

Advisor to the board, BoD, Italy

Private Equity

Interim Advisor to the Board of Directors and investors, consulting during due diligence phase, industry know-how and market insights within the M&A process, valuation and deal structuring, take over as part of the BoD.

 

 

CEO/CRO

 

Interim CRO Chemistry/Food, Germany/Poland

70 Mil.€ sales

Restructuring of a medium-sized industrial group, carve-out after corporate acquisition, relocation of a facility to Eastern Europe, reorganization of the group and new strategic implementation.

 

Interim CRO Furniture Manufacturing, Great Britain

1.750 Mil. $ sales

Turnaround manager and restructuring manager / CRO of an international office furniture manufacturer, heading of the operational restructuring and project management, stakeholder management, negotiation with banks and investors.

 

Prseident of the Board / CRO Construction, Serbia

40 Mil. € Sales

Interim President of a publicly listed comapny, Squeeze Out process, managing of the M&A process and successful sale of assets.

 

Interim CRO Mechanical construction, Germany

100 Mio.€ sales

Operational and financial restructuring of the company as restructuring manager, expand of the global presence and activities including sales, stabilization and expansion of the business.

 

Interim CRO Education, Great Britain / USA

10 Mio.£ sales

Restructuring of a medium-sized manufacturing company, carve-out from public listed  company after corporate acquisition, relocation of production to Germany, reorganization of the group.

 

 

CFO/CRO – project management corporate restructuring

 

Interim CFO/CRO Logistic/Transportation, Austria

500 Mil.€ sales

Restructuring of a strategic business unit, reorganization and change management, development of a best practice financial department, performance improvement and raise of earnings for the whole company.

 

Project management Plastic industry, Germany

40 Mil.€ sales

Project management of the turnaround of a medium-sized company in the plastics industry, process optimization and efficiency improvements, restructuring in sales, calculation, design, manufacturing and MIS implementation.

              

 

Project Management / IT / ERP

 

Interim PMO Credit institution, Germany / CEE

1000 Mio.€ sales

Outsourcing and relocation of the finance department of all European subsidiaries to CEE, Management of the transition and structuring of the Shared Service Centers, reorganization and staff reduction in Europe.

 

ERP/IT management Food industry, Germany

35 Mio.€ sales

Operational IT management, design, planning and implementation of the central IT project involving the implementation of a new ERP software, management of the enterprise-wide project teams.

 

Project Management FMCG, Austria

70 Mil. € Sales

Takeover of the project management and lead of the corporate wide strategy project, project structuring, reporting and management of all sub projects, steering committee.

 

Project Manager Automotive, Austria, Germany, Spain

250 Mil. € Sales

Project management and leading in the product development for a premium OEM, coordination all sub projects and teams, design, development, production and quality, contact person for the OEM and troubleshooting with full responsibility

 

 

Production / Operation / SCM

 

Production manager Plastic industry, Germany

35 Mil.€ sales

Production manager of a production company in the plastics processing, reorganization of production, adaptation of the production layout, reengineering, improvement and optimization of all production processes.

 

Production management Wood machining, Germany

150 Mio.€ sales

Restructuring and production management, in particular layout change and staff reduction on international level, process optimization in all stages of production and assembly plant in Eastern Europe.

 

Head of SCM Process Industry, Germany

80 Mil.€ Sales

Head of Supply Chain Management / SCM, optimizing of production planning, consolidation of the product assortment and working capital reduction

 

 

Sales / Marketing

 

Sales management Packaging, Austria

90 Mil.€ sales

Interim Sales Manager, design and implementation of a new sales organization, optimization of sales processes, business development and internationalization, key account management.

 

Marketing & Sales Manager FMCG, Germany

600 Mil.€ sales

Interim Vice President of Marketing & Sales of a production company in the consumer goods (FMCG), sales management, conception and implementation of the sales strategy, managing the sales organization.

 

 

Finance / Controlling

 

Interim head of Controlling Utilities, Austria CEE

800 Mil.€ sales

Design and optimization of management accounting and finance department, implementation of a decentralized financial controlling / division controlling including an matrix organization, medium-term / budget planning and reporting.

 

Interim CFO Plastic industry, Germany

35 Mil.€ sales

Financial restructuring and negotiating with financial institutions, cash management and planning, optimization of the ERP system, reorganization and management of the company.

 

Head of Controlling Metal Industry, Germany

300 Mil.€ Sales

Interim Head of Controlling, liquidity management, optimization of controlling organization, setup of modern controlling tools on an international basis, implementation new budgeting process.

 

 

Human Resources

 

Interim HR Retail, Austria/Germany

600 Mil.€ Sales

Interim Head of Human Resources, operational responsibility for all international HR issues including stores, support of the strategy process and implementation, project lead and management for a M&A and sale of company parts

 

Head of Salary&Wages Production Company, Austria

120 Mil.€ Sales

Takeover responsibility of the process for salary&wages, leading of the team, operative process for the salary statement, project management implementation new salary system.

 

 

 

Our project success is determined through the achievement of the customer’s goals   and the customer satisfaction …

… voices and references from our customers:

Dr. Ulf Lange, Board member ADCURAM Group AG

Dieter Schröder, Finance Manager worldwide leading deposit bank

DI. Jakob A. Mosser, Chief Executive Officer and Co-Owner of Schur Flexibles Group

Jens Rösler, Geschäftsführer CaseTech GmbH

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