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AlabamaSB152026 Regular SessionSenateWALLET

Uniform Assignment for Benefit of Creditors Act; creates a voluntary state law process for distressed organizations to liquidate assets and distribute proceeds to creditors

Sponsored By: Sam Givhan (Republican)

Enacted

Businesses & Financial Institutions

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Bill Overview

Analyzed Economic Effects

10 provisions identified: 0 benefits, 0 costs, 10 mixed.

Creditors get notices and filing deadlines

Known creditors must receive filing instructions within 30 days after the agreement takes effect, unless they waive notice in writing. Assignees must reasonably seek unknown creditors and set one claim deadline, 90 to 210 days after the agreement takes effect. Claims must follow the filing method, identify contact details, debt amount, type, and collateral, include available supporting records, and be signed under penalty of perjury. A proper claim provides initial proof, accepts the specified court’s authority, and transfers related improper-transfer recovery rights; undisputed claims must be allowed. Some claims without proof or reasonably excused late claims can be allowed; unsecured amounts use the agreement’s effective date, and creditors get claim-list access subject to privacy rules or nonpayment notices.

Disputed creditor claims require payment reserves

To dispute a claim, the assignee must notify the creditor and begin a disallowance proceeding before final distribution. Otherwise, the claim must be allowed. The assignee must reserve dollar-for-dollar the estimated payment on the disputed claim. A later-approved claim gets a proportionate catch-up payment before equal- or lower-priority creditors receive more. Reimbursement or contribution claims are disallowed to the extent the underlying claim is rejected, they remain contingent, or the claimant asserts rights to recover in another creditor’s place.

Workers and creditors get payment priorities

Protected secured creditors come first, up to collateral value, minus reasonable, necessary expenses benefiting them and accepted by them. Shortfalls become unsecured claims; excess collateral value can cover allowed interest and fees. Next come administration costs, including post-assignment taxes and wind-up expenses, then federal-priority debts, then qualifying wages, salaries, and commissions. Wage priority covers earnings within 180 days before the earlier of the assignment’s effective date or business closing, capped at the greater applicable bankruptcy-law or nonbankruptcy-law priority amount. Other priority unsecured claims follow, then general unsecured claims; equal-priority claims share proportionally when money is short. Remaining money pays specified late claims, then follows the agreement; interim payments require adequate reserves, subordination agreements apply, and securities-related claims rank lower, with common-stock claims ranking alongside common equity.

Alabama debtors get voluntary asset liquidation

Beginning October 1, 2026, the law applies to voluntary assignments made on or after that date. Eligible debtors transfer assets to an administrator, called an assignee, who manages them and pays creditors. Eligible debtors include Alabama residents and organizations with a principal business location in Alabama or internal affairs governed by Alabama law. Certain related, wholly owned or controlled organizations without business locations or employees also qualify. The transfer includes existing rights in assigned assets and later-acquired assets for organizations, but preserves others’ existing interests and laws against improper transfers.

Asset buyers get protections but fewer warranties

Buyers who pay value and act in good faith receive the assignee’s asset rights free of specified liens and interests. These protections apply even when the assignee fails to follow required procedures. Warranties are disclaimed where law permits, unless a written record provides otherwise. Assignees must record real-property assignments or notices where the property sits and follow title-transfer laws. Personal-property filings are optional, must identify the assignment and provide or offer the agreement, and do not themselves create security interests or settle rights.

Creditors gain shared but limited recoveries

For creditors who file claims, the assignee alone exercises the act’s rights to undo certain earlier transfers or obligations. Recoveries benefit the shared estate and cannot exceed the money, asset, or value that the creditor could have recovered. The law gives assignees a lien and specified creditor or good-faith purchaser rights to support recovery. Earlier transfers involving swaps, securities, commodities, forward contracts, repurchase agreements, or master netting agreements face Bankruptcy Code recovery limits.

Creditors get asset management and reports

Assignees must act loyally, use reasonable care to maximize payments, keep separate accounts and records, and follow tax rules. Unless the agreement limits their powers, they can run the business, borrow, hire experts, handle lawsuits, and manage or sell assets. Investments must meet prudent-investor standards; assets can be abandoned when more economical, and administrative expenses require sufficient assets free of liens. Creditors get reports at least every six months; claims expecting little or no payment need not be reviewed. Creditors with unpaid allowed claims get a final accounting, and discharge requires completed duties and distribution of all assets.

Creditors get coordinated payments across states

Alabama recognizes out-of-state assignments on issues where the result is substantially similar under this law. For specified wage, salary, commission, and government priorities, assignees use amounts asserted or determined under the other state’s law. Assignees may also give creditors the treatment available under that state’s assignment law. Alabama circuit courts can appoint eligible out-of-state assignees or nominees to handle assigned assets in Alabama. Asset holders must turn assets over after notice, except creditors with liens or related rights to offset debts or reduce claims.

Creditors get safeguards against administrator misconduct

Assignees cannot have barred creditor, insider, affiliate, or financial ties; agreed fees and noncontrolling public-company ownership are allowed. Debtors or creditors can ask a circuit court to remove an assignee for misconduct, noncompliance, or creditors’ best interests. An eligible named successor takes over, or the court appoints one; the departing assignee must account for and transfer assets. Each party avoids personal liability for the other’s acts, but assignees remain accountable for harmful duty breaches, with good-faith reliance defenses. Agreements cannot waive required duties or excuse bad faith or reckless indifference; helper protections exclude gross negligence and intentional wrongdoing.

Debtors must disclose assets and fees

The debtor and assignee must sign an agreement identifying both parties, all assets, payment rules, and assignee fees and calculations. The debtor must declare under penalty of perjury that all assets are assigned; good-faith reliance makes those assets count as assigned. The agreement takes effect when the last required person signs, unless it sets a later date. On or as soon as practical afterward, the debtor must provide asset, employee, and known-creditor lists, verified under penalty of perjury. Debtors and their named helpers must preserve and turn over assets, provide information, sign transfer records, and cooperate with required approvals.

Sponsors & Cosponsors

Sponsor

  • Sam Givhan

    Republican • Senate

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 301 • No: 0

House vote • 4/7/2026

Third Reading in Second House

Yes: 104 • No: 0

House vote • 4/7/2026

Motion to Read a Third Time and Pass - Adopted Roll Call 1237

Yes: 101 • No: 0

Senate vote • 2/10/2026

Givhan motion to Adopt - Adopted Roll Call 331

Yes: 32 • No: 0

Senate vote • 2/10/2026

Third Reading in House of Origin

Yes: 32 • No: 0

Senate vote • 2/10/2026

Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 332

Yes: 32 • No: 0

Actions Timeline

  1. Enacted

    4/17/2026Senate

  2. Ready to Enroll

    4/8/2026Senate

  3. Enrolled

    4/8/2026Senate

  4. Delivered to Governor

    4/8/2026Senate

  5. Signature Requested

    4/8/2026House

  6. Third Reading in Second House

    4/7/2026House

  7. Motion to Read a Third Time and Pass - Adopted Roll Call 1237

    4/7/2026House

  8. Reported Out of Committee Second House

    2/25/2026House

  9. Read for the Second Time and placed on the Calendar

    2/25/2026House

  10. Read for the first time and referred to the House Committee on Financial Services

    2/12/2026House

  11. Pending Committee Action in Second House

    2/12/2026House

  12. Engrossed

    2/11/2026Senate

  13. Third Reading in House of Origin

    2/10/2026Senate

  14. Fiscal Responsibility and Economic Development 1st Amendment Offered

    2/10/2026Senate

  15. Givhan motion to Adopt - Adopted Roll Call 331

    2/10/2026Senate

  16. Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 332

    2/10/2026Senate

  17. Fiscal Responsibility and Economic Development 1st Amendment

    1/21/2026Senate

  18. Reported Out of Committee House of Origin

    1/21/2026Senate

  19. Read for the Second Time and placed on the Calendar

    1/21/2026Senate

  20. Read for the first time and referred to the Senate Committee on Fiscal Responsibility and Economic Development

    1/13/2026Senate

  21. Pending Committee Action in House of Origin

    1/13/2026Senate

Bill Text

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