A west Omaha distributor has been losing money for three quarters. The line of credit is drawn down, two key vendors have moved the account to cash in advance, and the owner has already put personal money in twice. Payroll clears this Friday. It does not clear the Friday after that. The owner assumes the only formal option is Chapter 7, and everything she has heard about Chapter 7 makes her hesitate: the cost of counsel and a trustee, the public docket, the loss of any say in how the equipment and inventory get sold, and the prospect of a process that runs for a year while her customers and employees read about it.
Nebraska changed her options this year. On March 3, 2026, the Legislature passed LB 783, adopting the Uniform Assignment for Benefit of Creditors Act. Nebraska is the first state in the country to enact the uniform version. For a Nebraska business owner deciding how to wind down, that statute is now a genuine alternative to a federal bankruptcy filing, and most owners in the Omaha metro have never heard of it.
What is an assignment for the benefit of creditors?
An assignment for the benefit of creditors, usually shortened to an ABC, is a voluntary transfer. The struggling business, called the assignor, transfers its assets to an independent third party, called the assignee. The assignee sells the assets, collects the proceeds, evaluates what each creditor is owed, and distributes the money. The business does not choose which creditors get paid. That decision belongs to the assignee and follows the priority scheme the statute sets.
The closest federal analogue is a Chapter 7 liquidation. The economics are similar in both: the operating business stops, the assets are converted to cash, and the creditors divide the proceeds. Two features separate an ABC from a bankruptcy case. The process is contractual and is not administered by a bankruptcy judge, and it does not run under the Bankruptcy Code or the federal rules of procedure. Those two differences are what make an ABC faster and more flexible, and they are also what make it unsuitable for some situations.
Why did Nebraska need a statute at all?
Assignments for the benefit of creditors are not new. Nebraska courts were deciding disputes about them well over a century ago, in cases like Sager v. Summers, 49 Neb. 459, 68 N.W. 614 (1896), and Maul v. Drexel, 55 Neb. 446, 76 N.W. 163 (1898). What is striking about that body of law is where it stops. Nebraska’s reported ABC decisions are almost entirely pre-Depression. The tool fell out of use in this state as federal bankruptcy practice matured, and the old statutory framework did not survive in a form modern counsel could rely on.
That left a practical problem. An Omaha company that wanted an orderly, private wind-down had to choose between a federal bankruptcy case that might be larger than the problem and a common-law assignment with no clear rules on assignee duties, creditor notice, claim procedures, or the treatment of secured collateral. Lenders were reluctant to cooperate with a process whose contours nobody could predict. LB 783 supplies the missing framework.
Who is the assignee, and what does that person owe the creditors?
The assignee is the center of the process, and the statute makes the role a fiduciary one. The assignee must administer the assignment in good faith, must use reasonable care to maximize what is available for distribution, and must wind up the estate in the best interests of the estate and its creditors.
That last obligation is worth dwelling on, because it explains why the owner cannot simply appoint a friend. The assignee’s duty runs to the creditors, not to the business that hired the assignee or to the owner who signed the assignment. An assignee who sells the equipment to the owner’s brother-in-law at a convenient price has breached that duty, and the creditors have a claim. Business owners who approach an ABC expecting to steer the outcome have misread the statute. Owners who approach it wanting the wind-down handled competently and quickly by someone with no stake in the fight are using it correctly.
What are the deadlines?
Two matter most at the front end.
The assignee must notify creditors of the assignment within 30 days after the assignment agreement is executed. That notice starts the clock for everyone else.
Creditors then have a claims window that runs between 90 and 210 days from execution of the agreement to file a proof of claim. A creditor who sits on the notice risks its distribution.
A proof of claim has to carry real content: the creditor’s name and address, the amount claimed, the nature of the claim, a description of any assets securing it, and the supporting documentation. A claim that meets those requirements carries a presumption of validity as to both the amount and the basis. That presumption is the reason a well-documented claim is worth the hour it takes to assemble. A creditor who files a bare number and no backup has given the assignee a reason to dispute it, and disputes have to be initiated before the estate makes its final distribution.
Does an ABC wipe out what the owner personally guaranteed?
No, and this is where owners are most often surprised.
An ABC liquidates the assets of the business. It does not discharge the separate obligations of the people who signed personally. If the owner guaranteed the bank line, the equipment lease, and the building, those guaranties survive the assignment. The bank can pursue the guarantor for whatever the collateral does not cover.
Owners weighing an ABC against a bankruptcy filing should map every personal guaranty before deciding. In many closely held Nebraska businesses the guaranties are the real exposure, and the choice of wind-down vehicle for the company is a smaller question than what happens to the individual afterward. Our business law attorneys work that analysis in the order that matters: guaranties first, entity second.
What about transfers the owner already made?
This is the other half of the diligence, and it usually arrives late.
Payments and transfers made while a business was sliding toward insolvency are exposed under the Nebraska Uniform Voidable Transactions Act, Neb. Rev. Stat. secs. 36-801 to 36-815. A transfer is voidable as to a creditor if the debtor made it with actual intent to hinder, delay, or defraud any creditor, or if the debtor did not receive reasonably equivalent value and was left with unreasonably small assets for the business it was conducting or intended to incur debts beyond its ability to pay. Neb. Rev. Stat. sec. 36-805.
In plain terms: paying off the loan from your father-in-law two months before the assignment, or moving a truck into your own name, is the kind of transaction that gets unwound. An assignee who is doing the job properly will look for exactly those transfers, because recovering them increases the pool. Owners should assume every transfer in the run-up will be examined and should raise them with counsel before signing an assignment rather than after.
How does this compare to a receivership?
Nebraska law already allowed a creditor to ask a district court to appoint a receiver. Under Neb. Rev. Stat. sec. 25-1081, a receiver may be appointed in an action by a creditor to subject property to a claim, or between partners, limited liability company members, or others jointly interested in property, when that property is in danger of being lost, removed, or materially injured.
The difference is who starts it and who controls it. A receivership is a court proceeding, usually initiated by a creditor and often over the debtor’s objection, supervised by a judge, and priced accordingly. An assignment is voluntary and begins with the debtor’s own decision. A business that acts early can choose its path and its assignee. A business that waits until a lender loses patience may find a receiver appointed for it. For companies already in litigation with a lender or between deadlocked owners, our complex litigation group evaluates both routes together, because the leverage question and the wind-down question are the same question.
Is there a tax cost to the transfer?
The Legislature addressed this directly. LB 783 added an exemption to the documentary stamp tax for assignments transferring property from an assignor to an assignee under the Act, codified at Neb. Rev. Stat. sec. 76-902 and operative July 18, 2026.
Without that exemption, transferring Nebraska real estate into the assignment estate would have generated a stamp tax bill on the way in, which would have come straight out of what creditors recover. The carve-out removes a friction that would have made the Act far less useful for any business that owns its building.
When is an ABC the wrong tool?
Candor about the limits is more useful than a list of benefits.
An ABC does not impose an automatic stay. Bankruptcy does. A creditor holding a judgment can keep executing on it, and a landlord can keep pursuing eviction, unless that creditor agrees otherwise. If the business is being pulled apart by aggressive collection activity from several directions, the stay is the reason to consider a federal filing.
An ABC does not discharge debt for the entity in the way a bankruptcy discharge operates, and it does not bind a dissenting secured creditor the way a confirmed plan can. Secured lenders generally have to be brought along by agreement. A business whose principal lender will not cooperate has limited use for the Act.
An ABC also does not give the business a path to keep operating. It is a liquidation. A company that has a viable core and needs breathing room to reorganize around it is looking at Chapter 11, not an assignment.
Frequently Asked Questions
Does an assignment for the benefit of creditors show up publicly?
It generates far less public record than a bankruptcy case, which produces a docket that anyone can pull. An ABC is a contractual process, so there is no case number and no ongoing public filing history. Real estate transfers into the estate are recorded, and creditors receive direct notice, so the wind-down is not secret. For most Omaha businesses, the practical difference is meaningful: employees, customers, and competitors are far less likely to encounter it.
How long does the process take?
Considerably less than a comparable Chapter 7, largely because there is no court calendar to wait on. The claims window itself runs between 90 and 210 days from execution of the assignment agreement, and the estate cannot make its final distribution until claim disputes are initiated and resolved. A straightforward liquidation of a small Nebraska business is a matter of months.
Can creditors force a business into an ABC?
No. The assignment is voluntary and begins with the assignor’s decision to sign. Creditors who want a court to take control of an unwilling debtor’s assets are looking at a receivership under Neb. Rev. Stat. sec. 25-1081 or an involuntary bankruptcy petition.
We are a creditor and just received notice of an assignment. What should we do first?
Calendar the claims deadline immediately, then assemble the documentation before you file rather than after. A proof of claim that states the amount, the nature of the claim, any collateral, and attaches the supporting records is presumptively valid as to both the amount and the basis. That presumption shifts the work to whoever wants to dispute it. Also check whether you hold a personal guaranty from an owner, because your recovery from the estate and your claim against the guarantor are separate.
Is the Act available to any Nebraska business?
The Act is aimed at business entities winding down, not at consumer debt. Whether a particular company fits depends on its structure, its assets, and the posture of its secured lenders. That determination should be made before an assignment is signed, because an assignment made in the wrong circumstances can leave the owner worse off than a straightforward filing would have.
The Practical Takeaway for Omaha Owners
The window for choosing matters more than the choice itself. An owner who calls counsel while there is still inventory to sell, a cooperative lender, and cash to fund an orderly process has a real menu. An owner who calls after the bank has swept the account and a judgment creditor has levied on the equipment has whatever is left. The Act rewards businesses that act while they still have options, and the Omaha companies most likely to benefit are the ones that stop hoping for one more good quarter and start planning.
If your Nebraska business is running out of runway, or if you are a creditor who has received notice of an assignment and needs to protect your claim, Horgan Law LLC can help. Contact us at 402-965-0652 or visit horganlawfirm.com/contact-us.