General assignment


General assignment

A general assignment is a concept in bankruptcy law that has different meanings in different jurisdictions.
* In the United states, a general assignment 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.
* In other common law countries, a general assignment refers to an assignment of all or substantially all the assets of a natural person either absolutely or by way of security; [Although in practice most issues relate to assignments by way of security] such general assignments are generally void or voidable when made by a natural person or a partnership (but not a company) unless mandatory registration requirements are adhered to. [For example, in the United Kingdom, the general assignment of existing or future book debts must be registered under the Bills of Sale Act 1878, otherwise it is void once the person goes into bankruptcy; see section 344(2) of the Insolvency Act 1986.]

The United States

An assignment for the benefit of creditors is a relatively well-established common law tool that is an alternative to bankruptcy. General assignments are structured to save time and expense in concluding the affairs of an insolvent company. Through a general assignment, the insolvent company's assets can be sold quickly and efficiently, and the liquidation proceeds can be distributed to creditors shortly thereafter. The benefit for secured creditors frequently is that the secured creditor is generally relieved of the legal costs and risks associated with the foreclosure and sale of its collateral.

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. An assignment is not generally used for individuals because individuals do not receive discharges as a corporation would under Chapter 7 of the U.S. Bankruptcy Code.

In situations where the liquidation value of the assets exceeds the secured creditor's lien, the assignee is not normally required to obtain the consent of the secured creditor prior to taking the assignment. However, since the cooperation of the secured creditor frequently affects the liquidation of assets, in practice assignee's routinely obtain the consent of the secured creditor(s) in advance of the assignment. The acceptance by unsecured creditors is not necessary since under common law the proceedings, an assignment is deemed to benefit all unsecured creditors through equality.

Other common law countries

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.

The definition of book debts includes "debts which in the ordinary course of business would be entered in a well-kept trade book", ["Re Shipley v Marshall" [1863] 4 C.B. 566] future debts and future rents under a hire purchase agreement. Bills of exchange also fall within the definition of book debts, ["Re Siebe Gorman v Barclays Bank Plc" [1979] 2 Lloyds Rep 142] but a bank balance does not. ["Re Brightlife Ltd" [1987] 1 Ch 200]

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.

Footnotes


Wikimedia Foundation. 2010.

Look at other dictionaries:

  • general assignment — see assignment Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 …   Law dictionary

  • general assignment — As an act of bankruptcy: any conveyance at common law or by statute by which one intends to make an absolute and unconditional appropriation of all his property to pay his creditors, share and share alike. Anno: 57 ALR 859. See general assignment …   Ballentine's law dictionary

  • general assignment — An assignment made for the benefit of all the assignor s creditors, instead of a few only; or one which transfers the whole of his estate to the assignee, instead of a part only …   Black's law dictionary

  • general assignment — An assignment made for the benefit of all the assignor s creditors, instead of a few only; or one which transfers the whole of his estate to the assignee, instead of a part only …   Black's law dictionary

  • general assignment — noun : an assignment of all one s property not exempt by law for the benefit of all one s creditors with only such preferences as may be allowed …   Useful english dictionary

  • general assignment for benefit of creditors — A transfer of legal and equitable title to all debtor s property to trustee, with authority to liquidate debtor s affairs and distribute proceeds equitably to creditors. Central Fibre Products Co. v. Hardin, C.C.A.Tex., 82 F.2d 692, 694. See also …   Black's law dictionary

  • general assignment for benefit of creditors — A transfer of legal and equitable title to all debtor s property to trustee, with authority to liquidate debtor s affairs and distribute proceeds equitably to creditors. Central Fibre Products Co. v. Hardin, C.C.A.Tex., 82 F.2d 692, 694. See also …   Black's law dictionary

  • general assignment of error — An assignment of error on appeal which does not clearly indicate the particular rulings of which complaint is made by appellant. 5 Am J2d A & E § 670 …   Ballentine's law dictionary

  • general assignment for benefit of creditors — A conveyance by a debtor without consideration from the grantee of substantially all his property to a party in trust to collect the amount owing to him, to sell and convey the property, to distribute the proceeds of all the property among his… …   Ballentine's law dictionary

  • assignment — as·sign·ment n 1: the act of assigning 2 a: a position, post, or office to which one is assigned b: a task assigned 3: a present transfer of property or rights absolute assignment: an assignment in which the transfer is complete and leaves the… …   Law dictionary


We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.