Vol. XLIII, No. 14

Vol. XLIII, No. 14

Nebraska Adopts the Uniform Assignment for Benefit of Creditors Act

Effective July 18, 2026, Nebraska banks have a new state-law insolvency tool to understand and monitor: the Uniform Assignment for Benefit of Creditors Act. LB 783, approved by the Governor on March 3, 2026, adopts the Uniform Assignment for Benefit of Creditors Act in Nebraska and applies to assignments made on or after the Act's effective date. The provisions of the Act can be found at Neb. Rev. Stat. ​§§ 6-101 to 6-126.

I. Overview
Nebraska became the first state to adopt the Uniform Assignment for Benefit of Creditors Act, sometimes referred to as the "ABC Act." In simple terms, an assignment for the benefit of creditors, or "ABC," is a voluntary transfer of a business's assets to an independent assignee for liquidation and distribution to creditors. The process is similar in purpose to a Chapter 7 bankruptcy liquidation, but it is generally conducted outside direct court supervision and without the formal requirements of the federal Bankruptcy Code.

For Nebraska banks, the Act is significant because it creates a clearer and more predictable process for distressed borrowers that may choose an ABC instead of bankruptcy. The process may be attractive to borrowers and secured lenders because it can be faster, less expensive, more flexible, and less public than bankruptcy, and banks must act promptly to protect collateral, preserve rights, and comply with claims procedures.

II. What Is an Assignment for Benefit of Creditors?
An ABC begins when an assignor transfers all of its assets to an assignee for the benefit of creditors. Neb. Rev. Stat. § 6-102(5) defines an assignment as a transfer by a person of all of the person's assets to another person for the benefit of the transferor's creditors. The assignee then administers and liquidates the assignment estate, reviews creditor claims, and distributes proceeds according to statutory priorities and applicable law.

​Under Nebraska's Act, the assignment agreement must be signed by both the assignor and assignee and must include, among other items, the names and addresses of the parties, a transfer or provision for transfer of all assets, a sufficient description of the assets, distribution provisions, the assignee's fees, and a representation under penalty of perjury that all assets are being assigned. This "all assets" requirement is important because the Act is designed to gather the debtor's property into a single assignment estate for administration and distribution to creditors.

The Act applies only to certain assignors with a Nebraska connection, including organizations with a principal place of business in Nebraska, organizations governed internally by Nebraska law, individuals with a principal residence in Nebraska, and certain affiliated entities tied to Nebraska-based assignors.

III. Benefits for Nebraska Banks
A. Faster and more efficient collateral resolution
ABCs can often move more quickly than formal bankruptcy proceedings because they avoid many bankruptcy formalities and may involve limited court participation. This may help preserve going-concern value, reduce administrative expense, and improve recoveries where a borrower's business or assets are deteriorating.

B. Greater predictability in Nebraska insolvency matters
The Act replaces uncertainty with a defined statutory framework for assignee eligibility, notice, claims submission, claim disputes, distribution priorities, final accounting, and limited court involvement. This should benefit repeat creditors such as banks, asset-based lenders, and other commercial lenders by providing more certainty than a patchwork of common-law or inconsistent state-law ABC practices

C. Recognition of secured creditor priorities
The Act expressly addresses secured claims and requires protected secured creditors to receive the collateral or proceeds of collateral, subject to applicable priorities and limited deductions for reasonable and necessary preservation or disposition expenses that benefit the secured creditor and are incurred with the creditor’s consent or acquiescence. If the collateral value is insufficient, the secured creditor may hold an unsecured deficiency claim; if the collateral value exceeds the secured claim, the secured creditor may be entitled to contractually authorized interest, fees, costs, or charges.

D. Reduced documentary stamp tax issue for ABC transfers
The Act amends Nebraska’s documentary stamp tax exemptions (Neb. Rev. Stat. § 76-902) to include assignments that transfer property from an assignor to an assignee pursuant to the Uniform Assignment for Benefit of Creditors Act. This may reduce transaction costs where real property is included in an assignment estate.

E. Fiduciary accountability of the assignee
The assignee owes fiduciary duties to the assignment estate for the benefit of creditors, including duties of loyalty, good faith, reasonable care to maximize distributions, and winding up the estate in the best interests of the estate and creditors. An assignee may be personally liable for breach of fiduciary duty, subject to statutory limitations and good-faith reliance protections.

IV. Compliance Issues
A. ABC notices and calendar deadlines
The assignee must send notice of the assignment to known creditors within a reasonable time, not to exceed 30 days after the effective date of the assignment agreement. The assignee must establish a claims deadline that is not less than 90 days and not more than 210 days after the effective date of the assignment agreement. 

B. Proof of claim
A proof of claim must include the creditor’s contact information, claim amount, nature of the claim, identification of any estate asset securing the claim, signature under penalty of perjury, supporting documentation, and must be submitted using the assignee’s required method by the stated deadline. A compliant proof of claim is prima facie evidence of the validity and amount of the claim. Banks should include loan documents, notes, guaranties, security agreements, mortgages or deeds of trust, UCC filings, payoff statements, collateral descriptions, default notices, and fee and interest calculations. 

C. Lien perfection and collateral position
The Act preserves the importance of perfected liens and recognizes protected secured creditors. Before relying on secured status, banks should confirm perfection, priority, collateral descriptions, title records, UCC continuation dates, real estate filings, deposit account control agreements, and any subordination agreements. Subordination agreements remain enforceable under the Act to the same extent enforceable under other law. 

D. Do not assume there is an automatic stay.
Unlike bankruptcy, an ABC does not impose an automatic stay of creditor actions. Banks may still have collection, enforcement, litigation, setoff, or recoupment options, subject to loan documents, applicable law, and practical considerations. Counsel should be consulted before taking action, particularly where collateral is already in the hands of the assignee or liquidation efforts are underway.  

E. ABC sales are not bankruptcy "free and clear" sales.
ABCs generally do not provide the same “free and clear” sale protections available under section 363 of the Bankruptcy Code. The Act provides certain protections for transferees and discharge of subordinate interests, but protected secured creditor rights and existing liens remain critical to the analysis. Banks should review any proposed collateral disposition carefully and document any consent, reservation of rights, or payoff requirements. 

F. Monitor assignee conduct and reporting
The assignee must maintain a separate deposit account, keep business records, administer claims, provide creditor summaries at least every six months, notify creditors about compensation, and provide a final accounting. If a bank believes the assignee is acting improperly, the Act allows a creditor to request removal of the assignee in a Nebraska court for cause or if removal best serves the interests of creditors.

V. Conclusion
Nebraska’s adoption of the Uniform Assignment for Benefit of Creditors Act gives distressed businesses and their lenders a modern non-bankruptcy liquidation option. For banks, the Act may offer speed, lower cost, predictability, and clearer secured-creditor treatment. But it also requires disciplined compliance: prompt notice review, timely proof-of-claim submission, lien verification, careful monitoring of asset sales, and coordination with counsel when enforcement rights are implicated.

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The foregoing Compliance Update is for informational purposes only and does not constitute legal advice. As a reminder, the NBA general counsel is the attorney for the Nebraska Bankers Association, not its member banks. The general counsel is available to assist members with finding resources to help answer their questions. However, for specific legal advice about specific situations, members must consult and retain their own attorney.