2009 Texas Code
BUSINESS AND COMMERCE CODE
TITLE 3. INSOLVENCY, FRAUDULENT TRANSFERS, AND FRAUD
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.


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