Testing A Theory: That ABC Processes Are Under-Utilized In Most States

By: Donald L Swanson

Assignment for benefit of creditors (“ABC”) is an under-utilized process in most states.

That’s been my impression for many years, based on personal experiences and discussions with many professionals.

Further, my theory is that the reasons for such under-utilization are two-fold:

• some states, like Nebraska and Kansas, repealed their ABC statutes back in the mid-1940s, and the courts in such states have not explicitly recognized ABC under the common law or the details of what such common law might be—creating risks that often seem prohibitive; and
• other states, like Iowa, South Dakota and Colorado, have ABC statutes requiring court supervision and a bond—creating expenses that are often prohibitive (see Iowa Code § 681.1, et seq.; S.D. Codified Laws § 54-9-1 et seq.; and C.R.S. § 6-10-101 et seq.).

So, I decided to test my two-fold theory by looking for reported ABC cases in each of the five states identified above [note: I chose these five states because I live and office in one (Nebraska), and the other four are contiguous].

Research Efforts

My research efforts focused on, (i) using a legal search engine, (ii) searching for the words “assignment for benefit of creditors” among reported opinions in each of the five states, and (iii) reviewing each hit to see whether an actual ABC was involved in that opinion.  Note: many hits in such a search are from loan documents that identify an ABC as an event of default—those hits are ignored.  

I conducted a search for each of the five states identified above for the past fifty years: from 1976 to 2026. 

Then, for the sake of comparison and contrast, I conducted a similar search for the states of Illinois and California, where ABCs are known to frequently occur.

Disclaimer:  I’ll admit that my research efforts are likely incomplete and probably defective because, (i) my research skills and capacity are limited, (ii) proving the absence of something is always difficult, and (iii) my research is of a sample (limited to seven states), not exhaustive.

Results in the Five States

What I found in the five states of Nebraska, Kansas, Iowa, South Dakota and Colorado is this:

• reported opinions involving an actual attempt at doing an ABC are limited to a half-dozen in all states combined over the past 50 years; and
• the latest one among those six opinions issued a quarter of a century ago—in 2001.

Such research results represent the very definition of “under-utilized.”

Results in Illinois and California

To test the viability of my research efforts on the five states, I ran the same search for both Illinois and California, where I’m told that ABC processes are regularly utilized under the common law.  ABC under the common law means that neither court supervision nor a bond is required.

Here’s what I found:

• in Illinois, I found more than 40 reported opinions over the past 50 years involving an actual attempt at doing an ABC; and
• in California, I found more than 50 reported opinions over the past 10 years involving an actual attempt at doing an ABC.

Such research results, using the same research method as with the other five states, confirm the general viability of my research results and theory in the five states.

Uniform ABC Act

The Uniform Assignment for Benefit of Creditors Act, proposed by the Uniform Law Commission in 2025, updates and codifies the common law of ABC.

This past Friday, February 27, 2026, Nebraska’s Unicameral legislature passed the Uniform ABC Act. I believe it is the first state legislature to do so. And it did so on a unanimous vote!

Conclusion

The research results above reveal and illustrate one of the reasons the Uniform ABC Act needs to be enacted throughout these United States:

• to resurrect ABCs in states whose laws, or the absence of laws, currently impede ABC utilization.

** If you find this article of value, please feel free to share. If you’d like to discuss, let me know.