Some ABC History (For Nebraska & For Illinois), And A New Nebraska ABC Law—Part 1

Nebraska’s LB 308 & Committee Statement from 1945

Nebraska hasn’t had an assignment for benefit of creditors (“ABC”) statute since 1945 . . . until now.

On February 27, 2026, the Nebraska Unicameral Legislature passed the Uniform Assignment for Benefit of Creditors Act (LB 783) by unanimous vote, and on March 3, 2026, the Governor signed it into law. See this link.

Some Nebraska ABC History

At the turn of the year into 1945, Nebraska had a set of ABC statutes, consisting of 45 sections that were housed in Chapter 6 of the Nebraska statutes, titled “Assignments for Creditors.”

In 1945, Nebraska’s Unicameral Legislature repealed said Chapter 6 in its entirety, by passing LB 308 which:

describes itself as “An Act to repeal Chapter 6, Revised Statues of Nebraska , 1943, relating to assignment for creditors, as being obsolete” (emphasis is added); and
consists of a single one-sentence provision that reads, “Chapter 6, Revised Statutes of Nebraska, 1943, is repealed.”

Appended to that bill is a “Standing Committee Statement L.B. 308,” in which the Judiciary Committee Chair provides this explanation of why the contents of Chapter 6 on ABC are “obsolete”:

“L.B. 308 repeals Chapter 6, Revised Statutes of Nebraska, 1943, pertaining to assignments for the benefit of creditors”;
“This chapter, which covers 20 pages of the Statutes, was first enacted in 1883, but has become obsolete because superceded by the later passage of the National Bankruptcy Act”; and
“This chapter will never be of use unless the National Bankruptcy Law should be repealed” (emphases are added).

The repealed statutes in Chapter 6 were never replaced—until the 2026 legislative session.

Note: Above is a photo of the 1945 LB 308 with the Committee Statement appended, as such documentation currently appears in Nebraska archives.

Some Illinois ABC History

The record is not clear on how the Chair of Nebraska’s Judiciary Committee in 1945 came up with the idea that Nebraska’s ABC statute was “obsolete.”

Presumably, it was because of what happened in such places as Illinois, as shown by the following three Illinois Supreme Court opinons.

–Harbaugh v. Costello

A 1900 opinion of the Illinois Supreme Court holds that the Illinois ABC statutes of that day qualify as “a general insolvent law” and that the National Bankruptcy Act of 1898, therefore, “suspends or supersedes” the Illinois ABC statutes, based on the bankruptcy clause of the U.S. Constitution. Harbaugh v. Costello, 184 Ill. 110, 116-17, 56 N.E. 363, 364-65 (February 19, 1900).

–Howe v. Warren & Thompson v. Whitehead

Fortunately for the State of Illinois, and for the ABC processes that have continued to flourish there, the Illinois Supreme Court:

had already declared (at the time of its Harbaugh v. Costello opinion) that an ABC under the common law “exists independently of” the Illinois ABC statute (Howe v. Warren, 154 Ill. 227, 243, 40 N.E. 472, 477 (1894)); and
within two months after its Harbaugh v. Costello opinion, declares that the right to make an ABC “existed at the common law, and is to be regarded as existing in each of the States of the Union unless shown to have been changed or abrogated by statute” (J. Walter Thompson Co. v. Whitehead, 185 Ill. 454, 461-62, 56 N.E. 1106, 1108 (April 17, 1900)).

Nebraska & ABC Common Law

Unfortunately for ABCs in Nebraska, however, the Nebraska Supreme Court did not recognize the continued existence of ABCs under the common law, after the 1945 repeal. Nor has it cited to any legal authority on what the details of the common law of ABC in Nebraska might be.

I know that some ABCs have happened in Nebraska during my multi-decades career. But the uncertainties and related risks, arising from the absence of any statute or caselaw on the subject, have been significant impediments to the use of ABC processes in Nebraska during that time.

I, for one, have shied away from trying to do an ABC in Nebraska without some type of Nebraska law authorizing such a thing.

Conclusion

Fortunately, the problem of no statutory or caselaw on ABC in Nebraska has been solved by the recent enactment of the Uniform Assignment for Benefit of Creditors Act.

Yay!

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