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VideoHow Delaware’s Uniform ABC Act Could Influence Restructuring Strategies Nationwide
Bankruptcy & Restructuring Services
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On June 11, 2026, Delaware modernized its insolvency framework by adopting the Uniform Assignment for the Benefit of Creditors Act (Uniform ABC Act), replacing a statute that had remained largely unchanged since 1875.
Because a large percentage of U.S. companies are organized and incorporated under Delaware law, this change may influence how boards, lenders and investors evaluate restructuring and liquidation strategies nationwide.
Understanding an Assignment for the Benefit of Creditors (ABC)
At a high level, an ABC is a state-law insolvency proceeding in which a distressed company voluntarily transfers substantially all its assets to an independent fiduciary, known as an assignee. The assignee takes control of the assets, liquidates or sells them, resolves claims and distributes proceeds to creditors. ABCs generally provide a faster, less expensive and less public alternative to bankruptcy proceedings. They are often used when stakeholders agree that the business should cease operations and focus on maximizing value through orderly liquidation.
What is ABC vs. Chapter 11 vs. Chapter 7
Chapter 11 is primarily a reorganization process designed to preserve going-concern value and rehabilitate a business. While it offers powerful tools such as an automatic stay, debtor-in-possession (DIP) financing and Section 363 sales, it can be expensive and lengthy. Chapter 7 is a liquidation proceeding administered by a court-appointed trustee and is often used when operations have ceased.
ABCs occupy a middle ground, providing a professional fiduciary-led liquidation process that is typically faster and less costly than Chapter 11 while offering greater flexibility than Chapter 7. Depending on the company’s circumstances, an ABC may offer an efficient path to liquidation when preserving going-concern value is no longer a viable objective.
Changes Under Delaware’s New ABC Act
Delaware’s prior ABC statute included outdated requirements that increased costs and complexity for assignees and companies considering ABCs. The new Uniform ABC Act eliminates appraisal, inventory and bonding requirements and establishes a more modern framework to govern aspects of the ABC process, including assignee qualifications, fiduciary duties, asset sales, creditor rights and distributions. One of the largest changes is that new Uniform ABC Act allows assignees to voluntarily enter court-approved, 363-style auction procedures to provide assets free and clear of liens.
The legislation provides greater clarity and predictability while preserving flexibility, making ABCs a more attractive option for distressed companies, lenders and investors. By reducing procedural burdens and clarifying key aspects of the framework, these changes may help stakeholders evaluate and execute ABC transactions with more confidence and efficiency.
Why Delaware’s Adoption Matters Beyond Delaware
Delaware’s adoption of the Uniform ABC Act is likely to have an outsized impact nationally as many corporations are incorporated under Delaware law. The legislation promotes greater consistency and predictability in ABC proceedings and may encourage broader adoption of similar frameworks in other states. As more jurisdictions update their ABC statutes, stakeholders may benefit from increased familiarity, standardized procedures and expanded use of ABCs as an alternative to Chapter 7 and Chapter 11 bankruptcy.
How Weaver Can Help
As Delaware’s new ABC framework takes effect, stakeholders may want to reassess how ABCs fit within their restructuring and liquidation strategies.
Weaver works with companies, boards, lenders and investors on evaluating and executing ABC transactions. Our bankruptcy and restructuring services professionals have extensive experience serving ABC matters across a range of industries. To learn more about how ABCs may fit within your restructuring or liquidation strategy, contact our team.
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