The Uniform Assignment for Benefit of Creditors Act: Early Adoption and Emerging Trends

The Uniform Assignment for Benefit of Creditors Act (UABCA), which was promulgated in October 2025, is moving quickly from model legislation to enacted law in a growing number of jurisdictions. The UABCA represents a significant step toward modernizing and harmonizing state liquidation regimes. For companies, lenders, sponsors, and counterparties, Assignments for the Benefit of Creditors (ABCs) are likely to become an increasingly important insolvency tool. But jurisdiction-specific differences are apparent, and careful analysis will continue to be essential when evaluating whether and where to utilize the ABC process.

Utah, Nebraska, Alabama, Arizona, and Iowa have adopted UABCA-based statutes as comprehensive replacement or modernization measures,[1] and Delaware recently enacted a modified version that integrates the uniform framework with existing law.[2] 

The early legislative pattern suggests that states appear most likely to enact the UABCA by either adopting the model with high fidelity to the model statute or integrating uniform provisions into an existing ABC regime. Efforts to materially rewrite the baseline UABCA framework—particularly to add more prescriptive administrative requirements—may face greater resistance because they can undermine the UABCA’s goals of predictability, simplicity, and greater interstate uniformity.

What are Assignments for the Benefit of Creditors?

An ABC is a state-law liquidation process through which a financially distressed business (the “assignor”) transfers its assets to an independent fiduciary (the “assignee”) to liquidate assets and distribute proceeds to creditors. Because an ABC is initiated by the assignor, the company typically has greater control over selecting the fiduciary and structuring the process than in a creditor-initiated receivership or a Chapter 7 or involuntary Chapter 11 bankruptcy. ABCs are also comparatively efficient and cost-effective. However, ABCs may not always prove an attractive alternative to bankruptcy or receivership. For example, unlike in bankruptcy, ABCs generally do not allow an assignee to ignore contractual anti-assignment provisions. Thus, a company seeking to sell non-assignable contract rights may choose to do so through bankruptcy to maximize value. Additionally, the efficiency and cost effectiveness of ABCs may be compromised in situations involving numerous creditors and assets spread across diverse jurisdictions, which may result in multiple proceedings. While ABCs have long been part of the insolvency toolkit, the ABC process has been used with varying frequency depending on the jurisdictions involved and their respective ABC laws.

Why the UABCA Matters

Fragmented State Landscape and Inconsistent Utilization

ABCs have long been governed by a patchwork of state statutory and common-law rules. Among states that have ABC laws, the regimes vary significantly, including with respect to the degree of court oversight, creditor notice requirements, claims procedures, and an assignee’s powers. Indeed, some states have little or no law governing ABCs. The variation in ABC law between jurisdictions has resulted in disparate use and utility of the process across states. 

In jurisdictions with flexible, common-law based frameworks and minimal judicial oversight, ABCs tend to be utilized more frequently because they offer a compelling combination of control by the key parties, predictability, efficiency, and cost-effectiveness. Additionally, with limited court involvement, the process tends to be faster, less expensive, and less public than bankruptcy or judicial receivership. In contrast, ABCs are rarely utilized in jurisdictions that lack a functional ABC regime, and may be less attractive to assignors in states with more rigid, court-oriented frameworks that blur the distinction between assignments, receiverships and bankruptcy.

This fragmented landscape also can render ABCs less accessible and efficient for businesses with entities, assets, and creditors located across multiple states, because there is often uncertainty as to whether the authority of the assignee will be recognized in jurisdictions outside of the state where the assignment was commenced. 

Purpose and Overview of the UABCA

As ABCs have become more widely used, the absence of a uniform statutory framework has generated uncertainty, increased transaction costs, and complicated execution, particularly in multistate situations involving broadly dispersed assets and creditors.

The UABCA, approved by the Uniform Law Commission[3] in October 2025, is intended to reduce those inconsistencies by establishing a modern statutory framework preserving the core features that have historically made ABCs attractive—flexibility, efficiency, and more limited court involvement—while standardizing substance and procedure. The UABCA’s proposed statutory framework addresses, among other things: uniform definitions; qualifications, duties, and liability of assignees; notice provisions; procedures for filing, allowance, disallowance, and subordination of claims; interstate recognition; court involvement; and winding up the proceeding.

For instance, the UABCA clarifies applicability of the law to assignments made by entities whose principal place of business is in the enacting state, entities whose internal affairs are governed by that state’s laws, and certain affiliates of such entities. Importantly, the UABCA also provides that a proof of claim executed and submitted in compliance with the statute’s requirements not only is prima facie evidence of the claim’s validity and amount, but also constitutes (i) the creditor’s assignment to the assignee of the creditor’s right to bring a voidable transaction action relating to the creditor’s claim and (ii) consent to the applicable court’s jurisdiction.[4] Acceptance of the assignment by the assignee similarly constitutes the assignee’s consent to the jurisdiction of the applicable court.[5] Absent any interstate recognition issues or disputes regarding claims, distributions, or the assignee’s conduct or authority, the UABCA permits an entire ABC to proceed from beginning to end without court involvement.  And if the assignee, a creditor, or a party in interest seeks judicial intervention, the built-in consents to court jurisdiction can simplify the process.

If widely adopted, the UABCA could make ABCs a more predictable and scalable alternative to bankruptcy without converting the tool into a court-centered, adversarial insolvency process.

Early Adoption Patterns: Two Emerging Models

Wholesale Adoption of the UABCA

Alabama, Arizona, Iowa, Nebraska, and Utah have adopted the UABCA as a comprehensive, standalone regime to establish a new ABC framework or to supplant existing law that may be outdated, incomplete, or underutilized. These states have closely tracked the Uniform Law Commission’s model and preserve its nonjudicial baseline, making court involvement available but not mandatory, and leaving much of the process to be administered and controlled by the assignee.

The variation between the versions adopted by these states is generally narrow and practical, rather than structural. For example, Nebraska and Iowa adopted a transfer tax exemption for real property transfers from an assignor to an assignee pursuant to the general assignment agreement, providing potential assignors with further economic incentive to utilize the ABC process. Nebraska also adopted a flexible claims bar date range, rather than the model’s fixed approach.

Notably, all of these states adopted one of the key innovative features of the UABCA—the interstate recognition provisions—without material alteration.[6] As noted above, the ABC process has historically entailed uncertainty regarding the scope and enforceability of an assignee’s authority across state lines. Assignees have also operated without a framework for coordinated assignments by multiple assignors in the same enterprise group if they are not all formed under the laws of, or do not all have a principal place of business in, the same state. The UABCA’s interstate recognition provisions attempt to address this deficiency through a framework for courts to recognize and assist foreign assignees, authorizing ancillary proceedings when necessary, and permitting appointment of ancillary assignees. Although the UABCA, as a state law, does not create nationwide jurisdiction, it could significantly improve coordination among states—particularly among adopting states—and reduce one of the primary historical limitations of ABCs. 

Hybrid Adoption States (Integration with Existing ABC Frameworks)

States with developed ABC regimes may be more likely to integrate the UABCA into existing schemes rather than undertake wholesale repeal and replacement of their law. For example, Delaware’s preexisting statutory ABC framework was sparse, but the ABC process had been well developed through Chancery Court oversight. In adopting the UABCA, Delaware made targeted modifications to the model law intended to preserve and formalize preexisting practices.

Specifically, Delaware’s new statutory construct, which replaces the state’s 1875 ABC Act, expands creditor notification obligations, preserves a prominent role for Court of Chancery oversight, and provides a broader range of potential proof of claim bar dates (a floor of 90 days with no statutory ceiling). The Delaware law also bars certain regulated entities, such as banks and insurers, from serving as assignors and, like the states discussed above, includes the UABCA’s interstate recognition provisions. The law also gives the Court of Chancery the authority to communicate with courts overseeing ABCs in other states—a concept addressed in the UABCA’s comments, but not the act itself. Thus, the version of the UABCA adopted by Delaware moves in the direction of uniformity while still reflecting established local practice and a court-centered process.[7]

Key Takeaways

Adoption Momentum Is Real but Uneven

The trend of states adopting the UABCA is meaningful, but it is not monolithic. Jurisdictions such as Utah, Nebraska, Alabama, Arizona, and Iowa provide the closest approximation to a shared national baseline. Delaware demonstrates that hybrid integration is also viable where a mature ABC regime already exists. Colorado, where initial efforts to adopt the UABCA have not been successful,[8] suggests that not all states will be amenable to swift adoption. The result is increasing interstate convergence, but not uniformity.

Forum Selection Remains Critical

Even as the UABCA gains traction, forum selection will remain important. Differences in court involvement, notice requirements, procedural flexibility, and assignor carve-outs[9] will affect transaction planning, creditor strategy, and the attractiveness of certain jurisdictions for corporate domicile. Moreover, interstate issues in ABCs may remain complicated if the states involved have not adopted the UABCA’s interstate recognition provisions.

Contractual Planning Considerations

As adoption of the UABCA expands, parties should consider whether their agreements adequately address the possibility that they or their counterparty may seek to execute an ABC in a distressed situation. This issue may be particularly relevant where a transaction involves assets located in a UABCA jurisdiction, where an entity is organized under the laws of a UABCA jurisdiction, or where the parties have selected the law of a UABCA jurisdiction to govern their agreement. In those situations, contractual provisions that previously received little attention may take on increased significance in a distressed scenario. 

For example, parties entering into transactions involving assets located in UABCA jurisdictions should consider whether governing-law, venue, and forum-selection contract provisions could affect the availability or appeal of an ABC as a liquidation option. Relatedly, some parties may want to bargain for contractual provisions designed to preserve greater control or visibility if an ABC is initiated, such as limitations on assignability of contract rights or notice obligations beyond those imposed by the UABCA.

Ongoing Legislative Developments

Oklahoma and West Virginia continue to consider UABCA-based legislation, and both proposals appear to follow the wholesale-adoption paradigm with only limited deviations from the model. Oklahoma’s bill would enact a full statutory framework and has advanced to the state’s Senate, while West Virginia’s bill would create a new article codifying a comprehensive UABCA regime.[10]

Finally, it remains to be seen whether or how states with mature, functional out-of-court ABC practice—such as California and Illinois—will engage with the UABCA.