Delaware Enacts The Uniform ABC Act—Business Law Leadership Among States

By: Donald L Swanson

In a unanimous vote, on May 19, 2026, the Delaware Legislature enacts the Uniform Assignment for Benefit of Creditors Act (the “Uniform ABC Act”), and on June 10, 2026, the Governor signs it into law.  See this webpage.

Significance

This is a significant development. Here’s why (according to Delaware.gov, at this webpage).

Delaware has been the premier state of formation for business entities since the early 1900s. Today:

• more than two million business entities have made Delaware their legal home;
• more than 67.6 % of the Fortune 500 companies are incorporated in Delaware; and
• companies around the world take advantage of Delaware’s benefits.

A number of factors have led to Delaware’s leadership and dominance in business formation, including the following two.

1. The statute. The Delaware General Corporation Law (“DGCL”) is the foundation on which Delaware corporate law rests. It offers predictability and stability, it is shaped by corporate-law experts and protected from influence by special-interest groups, and the Delaware legislature every year reviews the DGCL to ensure its ability to address current issues.
2. The courts. Delaware is known worldwide for its judicial system and the expert and impartial judges that decide its corporate cases. The Delaware Court of Chancery is a specialized court of equity with specific jurisdiction over corporate disputes. It acts without juries and with only seven expert jurists selected through a bipartisan, merit-based selection process. Appeals from the Court of Chancery are directly to the Delaware Supreme Court, which is the ultimate word on Delaware law and has five justices, each of whom has considerable experience with Delaware’s business law. Id.

Lack of ABC Uniformity Among States

In recent decades, assignment for benefit of creditors (“ABC”) laws in the various United States, including Delaware, have been a patchwork of irregularity.  Each state has gone its own way:

• some states have no ABC law at all—no statutory scheme and no judicial recognition of the common law of ABCs;
• some states have no statutory ABC scheme but operate, instead, under the common law of ABCs;
• many states have statutory ABC schemes enacted in the late 1800s, with a variety of diverse and inconsistent provisions;
• some states have abbreviated ABC statutes (i.e., consisting of only a few-to-several sections);
• some states have statutory ABC schemes that have been updated substantially in recent times;
• some states have merged their statutory ABC schemes into their receivership statutes, so the only distinction is how a receivership is initiated—by a creditor (an involuntary receivership) or by the debtor (a voluntary receivership); and
• etc.   

Such variations have impeded the use of ABC processes throughout our United States.

Need for ABC Uniformity Among States

What’s needed is a uniform law of ABCs throughout all the United States—i.e., the Uniform ABC Act!

Such need is illustrated by the U.S. Constitution’s Bankruptcy Clause (Art. I, Sec. 8, Cl. 4), which authorizes Congress “to establish … uniform Laws on the subject of Bankruptcies throughout the United States” (emphasis added).

Back in the late 1700s, when the U.S. Constitution was written and ratified, the need for uniformity on debtor/creditor laws was already apparent.  Everyone recognized, back then, that commerce flowed across state lines and should not be impaired by any of the states. And so, the U.S. Constitution also provides that the states cannot impair contracts (Art. 1, sec. 10, Cl. 1) or regulate or impede interstate commerce (Art. 1, Sec. 8, Cl. 3).

And if the need for uniformity on debtor/creditor laws was obvious back then, that same need is on steroids today.  Consider this contrast:

• back at the writing of the U.S. Constitution, travel and communications labored along dirt paths that swung between muck and ruts, depending on when the rains came; but
• today, we have planes, trains and automobiles that speed across state lines without noticing, and we have electronic communications and intelligence that link-up all our United States with each other and the entire world—and with no delay whatever.

The need for uniformity, today, in all things dealing with commerce, is obvious—and that includes our ABC laws.    

Delaware’s ABC Leadership

My understanding is that, before 2026, Delaware had a statutory ABC scheme of its own that was unique and that practitioners from across our United States frequently utilized.

Despite such frequent use, the Delaware Legislature recognized the need for an ABC law that could be uniform with ABC laws in others states—and so it enacted the Uniform ABC Act. 

Presumably, the intention and hope is that other state legislatures will follow suit and make statutory ABC schemes uniform throughout our United States.   

Conclusion

Here’s hoping that many other state legislatures will join Delaware in enacting the Uniform ABC Act to help make statutory ABC schemes uniform throughout our United States!

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