An assignment for the benefit of creditors is commenced by the execution of a Deed of Assignment by the liquidating company, referred to as the “assignor.” This deed is executed on behalf of the assignor with the express consent and authority to take that action, whether that’s a sole member of a limited liability company, several principals of a corporate, a board of directors and/or shareholders.
In either instance, the company’s governing documents must be reviewed, and corporate counsel, if any, must be consulted to ensure that a decision to make an assignment is done with proper corporate authority. In the instance of publicly traded companies, an assignment for the benefit of creditors can be utilized, but the potentially lengthy process of obtaining corporate approval from shareholders must be taken into consideration in advance.
Once corporate authority has been obtained, a Deed of Assignment is executed by a corporate officer. This Deed effectively transfers all of the rights, title and interests of the assignee to an independent, third-party fiduciary referred to as the “assignee.”