Distressed asset assignment bill

Summary#

The Uniform Assignment for Benefit of Creditors Act of 2026 would replace the District’s existing 1964 assignment law with a detailed process in D.C. Code. It amends existing law; it does not create a new agency. Its stated goal is to give financially distressed businesses another way to wind up and distribute assets to creditors. The bill has been introduced and is not law.

  • A financially distressed business—or an individual who meets the bill’s District-residency rules—could transfer its assets to an independent assignee for creditors. The transfer is initiated by the assignor, not imposed by the bill.
  • The assignee would have fiduciary duties to creditors, including duties to act loyally, use reasonable care to maximize distributions, and wind up the assignment in creditors’ interests.
  • The assignee could operate a business, sell or lease assets, incur debt, settle claims, and pursue certain claims or recoveries. These are powers, not requirements; the assignee must use them consistently with fiduciary duties.
  • The assignee must notify known creditors within 30 days, provide regular summaries, examine most claims, and distribute available assets according to legal priorities. Creditors generally must submit claims by a deadline the assignee sets, between 90 and 210 days after the assignment takes effect.
  • The Superior Court could resolve disputes and remove an assignee in specified circumstances, but the bill does not require court supervision of every assignment.

What it means for you#

  • Businesses or other eligible assignors: You could transfer your assets through this process instead of using other winding-up options. You would have to provide asset, employee, and creditor lists, verify them under penalty of perjury, preserve and turn over assets, and assist the assignee.
  • Creditors: You would receive notice if known to the assignee, and at least six-monthly summaries of the assignment’s assets, debts, and expenses. To preserve a claim, you may need to submit a signed proof of claim by the deadline. The bill sets a priority order for distributions; creditors at the same level share available assets proportionally if there is not enough to pay them in full.
  • Employees: Unpaid wages, salaries, and commissions earned within the specified 180-day period receive a distribution priority, subject to limits tied to federal or other applicable law. The bill does not guarantee that wages will be paid in full.
  • Secured creditors and buyers: Existing interests in assets generally remain, and certain secured creditors receive the value of their protected interest before other distributions. A good-faith buyer for value may take an asset free of specified interests after an assignee’s disposition.
  • Taxpayers and the public: The bill does not create a public benefit program or guarantee creditors a recovery. Court involvement is available for disputes, but routine court supervision is not required.

Money#

The available material gives no public cost estimate.

  • The assignee’s fees and expenses are paid from the assignment estate; the agreement must describe the fees and how they are calculated.
  • The assignee must pay assignment administration expenses only to the extent the estate has sufficient unencumbered assets.
  • The bill requires the assignee to supply creditor notices, records, and reports, but the available material does not estimate the cost of doing so or any added cost to the District’s courts.

What is unclear#

  • The supplied material does not include the existing 1964 law, so its current procedures and the precise changes from current law could not be verified.
  • The fiscal impact statement is said to be in a committee report, but that report was not supplied.
  • The bill does not require court approval before an assignee exercises its powers. How often parties would seek court review is not stated.
  • The assignee sets the claim-submission method and deadline within the bill’s time range. The bill allows some late claims, but does not require the assignee to accept them.
  • The bill does not specify how this process would interact in practice with other available winding-up procedures.

Case for#

  • The bill appears intended to offer a way to wind up a distressed business and distribute its assets without requiring court supervision of every step.
  • A possible argument for the bill is that clear duties, creditor notices, claim rules, and distribution priorities could make the process more predictable.
  • An independent assignee’s fiduciary duties may help protect creditors while the assignee collects, sells, or abandons assets.
  • The bill permits court action when a dispute arises and allows a court to remove an assignee for cause or when removal would best serve creditors.

Case against#

  • One concern is that an assignee can operate a business, incur debt, sell assets, and settle claims without routine court approval. The bill relies on fiduciary duties and possible court action to constrain those powers.
  • The bill gives the assignee discretion over important matters, including whether to abandon an asset and whether to accept some late claims.
  • Creditors may receive less than the amount owed, and the bill does not guarantee that the estate will have enough assets to pay them.
  • The costs of assignee fees, professionals, and administration reduce the assets available for distribution; the supplied material does not estimate those costs.