BUSINESS & COMMERCE CODE
TITLE 3. INSOLVENCY, FRAUDULENT TRANSFERS, AND FRAUD
CHAPTER 23. ASSIGNMENTS FOR THE BENEFIT OF CREDITORS
SUBCHAPTER A. GENERAL PROVISIONS
§ 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, § 1.
§ 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, § 1.
SUBCHAPTER B. THE ASSIGNMENT
§ 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, § 1.
§ 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, § 1.
§ 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, § 1.
SUBCHAPTER C. DUTIES AND RIGHTS OF ASSIGNEE
§ 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, § 1.
§ 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, § 1.
§ 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, § 1.
§ 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, § 1.
§ 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, § 1.
§ 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, § 1.
§ 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, § 1.
§ 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, § 1.
§ 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, § 1.
SUBCHAPTER D. DUTIES AND RIGHTS OF CREDITORS
§ 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, § 1.
§ 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, § 1.
§ 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, § 1.
§ 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, § 1.
