Jan. 29 event examines the Assignment for the Benefit of Creditors (ABC) process
“It’s not a real good thing if creditors take over your business,” says Tim Donaldson, communications chair for the Turnaround Management Association (TMA). But that’s what happened in mid-2014 when CM Companies (formerly Creative Memories, a scrapbooking company) filed a voluntary Assignment for the Benefit of Creditors (ABC) in state court. On Jan. 29, the TMA will delve into the finer details of that decision as part of its event “The ABCs of a Minnesota Assignment for the Benefit of Creditors” at the Minneapolis Club.
“The ABC is a centuries-old process for liquidating a failing business,” says Phil Bohl of Gray Plant Mooty, counsel to CM Companies. “A version of the ABC process was previously available in Minnesota, but that version was cumbersome and almost never used. A revised ABC statute became effective in Minnesota in 2012 that includes a number of features that make it a valuable tool under the right circumstances.”
This case was chosen because Creative Memories “is well known locally and has gone through a number of restructuring life cycles, the most recent being under the new Assignment for Benefit of Creditors statute,” says Brent Johnson, chairman of the TMA education committee. “Given the recent formality put around the ABC process, we thought this might be a great way to share some of the details of that restructuring alternative with professionals who may not yet be that familiar.”
The TMA is primarily composed of professionals who work with troubled companies and aid in the recovery process, such as accountants, interim corporate managers, and financial advisers. Attorneys, lenders, and investors are also represented among its members. The organization hosts about 10 educational events a year on topics like bankruptcy, corporate restructuring, distressed investing, and performance improvement. Some educational events are members-only, but registration for the ABC event is open to all.
The Jan. 29 event panel includes Bohl, fellow Gray Plant Mooty attorney Phil Kunkel, former CEO of Creative Memories and CM Companies Chris Veit, and assignee Jim Bartholomew of Lighthouse Management Group. Their presentations will cover the advantages and disadvantages of ABC, as well as how it differs from Chapter 11 or Chapter 7 bankruptcy.
“We expect that attendees will take away an understanding of the new ABC process and how that process may be used to maximize the recoveries obtained by the various constituencies of a financially stressed business,” Bohl says.
For more information and to register, visit TMA’s website.