Arizona now has a detailed set of rules for when a business or individual covered by the law hands over all of its assets to an independent assignee to sell and pay creditors, covering who can serve, creditor notice, claim deadlines and the order of payment.
Official title: uniform assignment; benefit of creditors
- September 12, 2026
- Applies only to assignments made on or after the law takes effect: All rules in the new chapter
What changes
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NowAn "assignment for the benefit of creditors" generally means a person or business transferring all of its assets to someone else, called the assignee, to be used to pay its creditors. The assignee must be independent: not a creditor, insider or affiliate of the assignor, and with no claim or material financial stake other than fees and expenses under the agreement. The agreement must be a record signed by both sides that lists the assets, explains how the assignee's fees are figured, and includes the assignor's statement, under penalty of perjury, that it is assigning all of its assets.
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NowUnless a creditor waives notice in a signed record, the assignee must notify each known creditor within a reasonable time, no more than 30 days after the agreement takes effect. The assignee must also use reasonable means to reach unknown creditors. The assignee must set one deadline for proofs of claim, 120 days after the agreement takes effect. It must send creditors a summary of assets, liabilities and expenses at least every 6 months, and a final accounting at the end.
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NowCreditors file a proof of claim signed under penalty of perjury. Filing one counts as agreeing to the court's authority and hands the creditor's right to challenge certain past transfers to the assignee. The assignee may dispute a claim and may ask a court to disallow it, but must do so before final distribution or the claim is allowed. The assignee must also set aside a dollar-for-dollar reserve for disputed claims.
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NowMoney is paid in this order: (1) certain protected secured creditors, following lien priorities under other law, (2) administration costs, including the assignee's and professionals' fees, (3) claims with priority under federal law, (4) wages, salaries or commissions earned within 180 days before the agreement or the business closing, up to set limits, (5) other priority unsecured claims, then (6) general unsecured claims. Within the last 2 unsecured groups, creditors share proportionally if there is not enough to pay everyone in that group.
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NowThe assignee owes creditors duties of loyalty and reasonable care. The assignee is personally liable for breaching those duties, but not when relying in good faith on the assignor's records or on qualified advisers. The assignor or a creditor may ask a court to remove the assignee for cause, such as fraud or incompetence, or when removal best serves creditors.
Who it affects
- Businesses based or organized in Arizona, and individuals whose main home is in Arizona, that make an assignment for the benefit of creditors
- Creditors of those assignors, including employees owed wages
- People and companies serving as assignees
- Buyers of assets sold by an assignee
- Arizona courts
What you need to do
Nothing for most people. A creditor of someone making an assignment under this law must submit a proof of claim by the assignee's deadline (120 days after the agreement takes effect), unless the claim is otherwise allowed without one, for example because the assignee chooses to allow it.
What the law doesn't answer
- Whether Arizona had earlier rules on assignments for the benefit of creditors, and whether any were replaced
- Whether there is any limit on the fees an assignee may charge
- Whether assignees must be licensed or approved by anyone before serving
- Whether a court must approve an assignment before it starts
- Any penalty for an assignee who misses the 30-day notice deadline, apart from general liability and possible removal
This summary describes the law as enacted. Later laws, court rulings or referendum petitions can change the picture. Check the official text for the current wording.