A company that has decided to wind down may assign its assets to a third-party assignee who liquidates them and distributes proceeds to creditors.

Mechanics. A board and shareholder resolution, an assignment agreement transferring all assets to the assignee, notice to creditors, a claims process, liquidation, and distribution in statutory priority.

Advantages. Speed, lower cost, the assignee’s ability to sell assets quickly and often to a buyer identified before the assignment, less publicity, and no court supervision in many states.

Limitations. No automatic stay, so a determined creditor can still levy in most states. No ability to sell free and clear of liens without consent. No ability to assume and assign contracts over a counterparty’s objection. Secured creditors are unaffected and must consent to any sale of their collateral.

Directors’ duties. Once the company is insolvent, duties are commonly described as running to the enterprise for the benefit of creditors, which affects how the wind-down decision is documented.

Employee obligations. Final wages, accrued vacation and mass layoff notice requirements apply and are not discharged.

Selection of the assignee matters, since the process depends entirely on their competence and on creditor confidence in them.