CHAPTER 23. ASSIGNMENTS FOR THE BENEFIT OF CREDITORS
BUSINESS AND COMMERCE CODE
TITLE 3. INSOLVENCY, FRAUDULENT TRANSFERS, AND FRAUD
CHAPTER 23. ASSIGNMENTS FOR THE BENEFIT OF CREDITORS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 23.01. DEFINITIONS. In this chapter, unless the context
requires a different definition,
(1) "assigned estate" means all the real and personal estate of
an assigning debtor passing to the consenting creditors under an
assignment by virtue of Section 23.02 or 23.09(b) of this code;
(2) "assignee" means an assignee for the benefit of creditors;
(3) "assigning debtor" means a person executing an assignment;
(4) "assignment" means a general assignment for the benefit of
creditors made under this chapter;
(5) "consenting creditor" means a creditor who has consented to
an assignment in one of the ways provided by Section 23.30 of
this code; and
(6) "real and personal estate" does not include property exempt
by law from execution.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1.
Sec. 23.02. NATURE AND EFFECT OF ASSIGNMENT. (a) A debtor may
assign his real and personal estate under this chapter to an
assignee for the benefit of the debtor's creditors.
(b) An assigning debtor shall provide in the assignment for
distribution of all his real and personal estate to each
consenting creditor in proportion to each consenting creditor's
claim.
(c) Regardless of an expression to the contrary, an assignment
passes all an assigning debtor's real and personal estate to each
consenting creditor in proportion to each consenting creditor's
claim.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1.
SUBCHAPTER B. THE ASSIGNMENT
Sec. 23.08. FORM AND CONTENT OF ASSIGNMENT. (a) For an
assignment to be valid,
(1) the assigning debtor must make the assignment in writing;
and
(2) it must be proved or acknowledged and recorded in the manner
provided by law for the conveyance of real estate.
(b) The assigning debtor shall attach to his assignment an
inventory containing the following information:
(1) a list naming each creditor of the assigning debtor;
(2) the resident address, if known, of each creditor;
(3) the amount owed each creditor and the type of debt;
(4) the consideration for the debt and the place where the debt
arose;
(5) a description of each existing judgment or security for the
payment of the debt;
(6) a schedule of all the assigning debtor's real and personal
estate at the date of the assignment;
(7) a description of
(A) each encumbrance on the real and personal estate; and
(B) each voucher and security relating to the estate; and
(8) the value of the estate.
(c) The assigning debtor shall sign the inventory required by
Subsection (b) of this section and swear that it is just and
true.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1.
Sec. 23.09. FRAUD DOES NOT DEFEAT ASSIGNMENT. (a) An
assignment is not affected and a consenting creditor is not
deprived of his proportionate share of the assigned estate by the
fraudulent act or intent of the assigning debtor or assignee. A
consenting creditor is a proper party to a suit filed to enforce
a right under an assignment, or to protect an interest in an
assigned estate.
(b) Except as to an innocent purchaser for value, a transfer of
property made in contemplation of an assignment with an intent to
defeat, delay, defraud, or give preference to a creditor is void
and the property passes under the assignment rather than by the
transfer.
(c) An assignee may sue to recover property transferred with an
intent described in Subsection (b) of this section, and when the
property is recovered, the assignee shall apply it for the
benefit of the assigning debtor's creditors along with property
belonging to the assigned estate already in the assignee's
possession. If an assignee neglects or refuses to sue to recover
property transferred with an intent described in Subsection (b)
of this section, a creditor, after securing the assignee against
cost or liability, may sue in the assignee's name to recover the
property.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1.
Sec. 23.10. ASSIGNMENT DISCHARGES DEBTOR. If an assigning
debtor makes an assignment, he is discharged from liability on
the claim of a consenting creditor unless the consenting creditor
does not receive at least one-third of the amount allowed on his
claim against the assigned estate.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1.
SUBCHAPTER C. DUTIES AND RIGHTS OF ASSIGNEE
Sec. 23.16. ASSIGNEE'S QUALIFICATIONS, DUTY TO RECORD
ASSIGNMENT, AND BOND. (a) An assignee shall be a resident of
this state and a resident of the county in which the assigning
debtor resides, or in which the assigning debtor's principal
business was conducted.
(b) Immediately after the assignment instrument is executed and
delivered to him, the assignee shall record it in the county of
his residence and in each county in which there is real property
conveyed to the assignee by the assignment.
(c) Within five days after delivery to him of the assignment
instrument, the assignee shall execute a bond
(1) with a surety who must be approved by the judge of either
the county or district court in the county of the assignee's
residence;
(2) conditioned that he will perform faithfully his duties as
assignee and distribute proportionately the net proceeds of the
assigned estate to the consenting creditors entitled to it under
the assignment;
(3) in an amount fixed by the county or district judge;
(4) payable to the state; and
(5) which inures to the benefit of the assigning debtor and each
of the creditors.
(d) The assignee shall file the bond with the county clerk of
the county in which the assigning debtor resides and then the
assignee shall take possession of the assigned estate and carry
out the assignment.
(e) An assignment is valid as against an assigning debtor or his
creditors even though the assignee fails to execute and file a
bond as required by Subsections (c) and (d) of this section.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1.
Sec. 23.17. NOTICE OF ASSIGNEE'S APPOINTMENT. (a) Within 30
days after an assignment is executed, the assignee shall publish
notice of his appointment as assignee in a newspaper published in
the county
(1) where the assigning debtor resides or where he operated his
principal business before the assignment; or
(2) nearest the assigning debtor's residence or principal
business if a newspaper is not published in the county of the
assigning debtor's residence or principal business.
(b) The assignee shall publish notice of his appointment as
assignee once each week for three consecutive weeks.
(c) The assignee shall notify by mail each of the assigning
debtor's listed creditors of his appointment as assignee.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1.
Sec. 23.18. REPLACEMENT OF ASSIGNEE. (a) A county or district
court of the county in which the assignee resides shall remove or
replace the assignee on application of the assigning debtor or a
creditor, or on its own motion,
(1) if the court is satisfied that the assignee has not executed
and filed the bond required by Sections 23.16(c) and (d) of this
code;
(2) if the assignee refuses or fails to serve for any reason; or
(3) for good cause.
(b) On removal, resignation, or death of the assignee, the court
shall appoint in writing a new assignee in term time or vacation.
(c) As soon as the new assignee executes and files a bond as
required by Sections 23.16(c) and (d) of this code, he shall take
possession of the assigned estate and carry out the assignment.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1.
Sec. 23.19. ASSIGNEE'S DUTY TO DISTRIBUTE ASSIGNED ESTATE. Each
time an assignee has enough money to pay 10 percent of the
assigning debtor's debts, he shall distribute the money among the
creditors entitled to receive it in proportion to their claims
allowed under Section 23.31(b) of this code.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1.
Sec. 23.20. DISCOUNT OF CLAIM NOT DUE AND ALLOWANCE OF SECURED
CLAIM. (a) The assignee may allow a claim which is not due at
its present value by discounting it at the legal rate.
(b) If a creditor holds collateral to secure his claim worth
less than his claim, the assignee may estimate the value of the
collateral and allow the creditor as a claim against the assigned
estate only the difference between the value of the collateral
and the amount of the claim.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1.
Sec. 23.21. ASSIGNEE'S ENTITLEMENT TO COMPENSATION. An assignee
is entitled to reasonable compensation for his services and
reimbursement for his necessary expenses, including an attorney's
fee, all of which shall be fixed by the county or district court
who approved his bond. The compensation, expenses, and attorney's
fee fixed by the county or district court shall be paid out of
the assigned estate.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1.
Sec. 23.22. EXAMINATION OF DEBTOR OR OTHER PERSON. (a) The
court in which a proceeding involving an assigned estate has been
filed may, after reasonable notice to each person concerned,
compel any person to answer questions under oath on
(1) application of a creditor of the assigning debtor; or
(2) its own motion.
(b) The court may compel attendance and an answer to any
question concerning the assigned estate by writ or order as in
other cases. Questions asked and answers given during the
examination shall be in writing, the person examined shall swear
to and sign his answers before the clerk, and the questions and
answers shall be filed with the clerk for use by anyone
interested in the proceeding.
(c) The court shall charge the cost of the examination against
the applicant or the assigned estate, as the court deems proper.
(d) The assigning debtor may not be prosecuted or punished for
an answer given by him during the examination.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1.
Sec. 23.23. ASSIGNEE'S FINAL REPORT AND DISCHARGE. (a) An
assignee wishing to be discharged from his appointment shall
prepare and file for record with the county clerk of the county
in which his assignment is recorded a sworn report describing
(1) all property which came into his possession under the
assignment; and
(2) how and to whom he distributed the property.
(b) The assignee shall also deposit in the registry of the court
who approved his bond money belonging to the assigned estate
still in his possession at the time he files his report under
Subsection (a) of this section. The court shall distribute the
money under this chapter to the consenting creditors and assignee
and, in the case of surplus, to the nonconsenting creditors and
assigning debtor.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1.
Sec. 23.24. TIME LIMIT ON BRINGING ACTION AGAINST ASSIGNEE. An
action against an assignee based on his conduct in carrying out
the assignment, as shown in his report filed under Section
23.23(a) of this code, must be brought within 12 months after the
report is filed or the action is barred.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1.
SUBCHAPTER D. DUTIES AND RIGHTS OF CREDITORS
Sec. 23.30. CREDITOR'S CONSENT TO ASSIGNMENT. (a) A creditor
must inform the assignee in writing of his consent to the
assignment within four months after the assignee gives the notice
required by Section 23.17 of this code.
(b) If a creditor is not given actual notice of an assignment,
but subsequently learns of the assignment, he may consent to the
assignment at any time before the first distribution of the
assigned estate is begun.
(c) Receipt by a creditor of payment for part of his claim from
the assignee is conclusive evidence of the creditor's consent to
the assignment.
(d) If a creditor does not consent to an assignment, he is not
entitled to receive any of the assigned estate under the
assignment.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1.
Sec. 23.31. CREDITOR'S PROOF AND ASSIGNEE'S ALLOWANCE OF CLAIM.
(a) Within six months after the first publication of notice of
appointment required by Section 23.17 of this code, a consenting
creditor must file with the assignee a statement, sworn to by the
creditor, his agent, or attorney,
(1) describing the nature and amount of the creditor's claim
against the assigning debtor; and
(2) stating that
(A) the claim is true;
(B) the debt is just; and
(C) all proper credits or offsets have been allowed against the
claim.
(b) The assignee shall allow a claim filed under Subsection (a)
of this section against the assigned estate unless he has good
reason to believe the claim is not just and true.
(c) If a creditor does not file a statement in the time required
by Subsection (a) of this section, he is not entitled to receive
any of the assigned estate.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1.
Sec. 23.32. CREDITOR'S SUIT ON DISPUTED CLAIM. (a) The
assignee shall give any creditor a copy of any statement of claim
filed under Section 23.31(a) of this code if the creditor
requests a copy.
(b) Within eight months after the first publication of notice
required by Section 23.17 of this code, an assigning debtor or
creditor may sue to
(1) set aside an allowance made on a claim by the assignee; and
(2) restrain payment of the claim by the assignee.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1.
Sec. 23.33. NONCONSENTING CREDITOR'S RIGHT TO SURPLUS. If a
creditor does not consent to an assignment, he may garnishee the
assignee for the excess of the assigned estate remaining in the
assignee's possession after the assignee has paid
(1) each consenting creditor the amount of his claim allowed
under Section 23.31(b) of this code; and
(2) the expense of carrying out the assignment.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1.