SB 26-79

Senate Bill 26-79, also known as the Uniform Assignment for Benefit of Creditors Act, is a law in Colorado that allows individuals who are struggling with debt to transfer their assets to another person or entity (called an assignee) so that creditors can be paid. This bill sets rules about who can act as this assignee and what duties both the debtor (assignor) and the assignee must follow, such as managing assets properly and notifying creditors regularly. The law ensures that creditors are paid in a specific order and protects both parties from personal liability for each other's actions, except if the assignee breaks their duty to act fairly. Since this bill has been signed into law, it is now active and enforceable in Colorado, meaning individuals and businesses can start using this process to manage debts under these new guidelines.

Official Summary

Colorado Commission on Uniform State Laws. The bill enacts the "Uniform Assignment for Benefit of Creditors Act". An assignment is a transfer by a person (assignor) of all of the person's assets to another person (assignee) for the benefit of the assignor's creditors (assignment).     The bill prohibits certain persons from serving as an assignee, including creditors, affiliates, or insiders of the assignor, and creates requirements for an assignment agreement.     The bill establishes specific duties for the parties to an assignment, including:The assignor must preserve and turn over assets, provide information necessary to administer the assignment estate, and verify a list of all known creditors and assets under penalty of perjury;The assignee has a fiduciary duty to the assignment estate and must manage the assignment estate in good faith to maximize distributions and wind up the assignment in a timely manner; andThe assignee shall notify known creditors of the assignment, maintain a separate deposit account for money, collect on or dispose of assets, and provide financial summaries to creditors at least every 6 months.     The assignee is authorized to perform specific acts in furtherance of the assignee's duties, including operating the assignor's business, incurring debt, settling claims, and avoiding certain transfers that a creditor could have avoided under other law. The assignee may allow or dispute a creditor's claim against the assignment estate as specified in the bill.     The priority of distributions from the assignment estate is specified in the bill. The assignor and assignee are not personally liable for each other's acts. However, an assignee is personally liable for a breach of fiduciary duty. A court may remove an assignee for cause or if removal best serves the interests of the creditors. The assignee is discharged from the assignee's duties upon sending a final accounting and distributing all assets.(Note: This summary applies to this bill as introduced.)

Topics

Votes