A Texas ABC Assignee Must Live in the Debtor's County, and Cannot Take Possession Until the Bond Is Filed

When a business fails without filing bankruptcy, the common state-law alternative is an assignment for the benefit of creditors - the debtor assigns everything to an assignee who liquidates it and pays creditors. For anyone who secures and maintains commercial buildings, an ABC is the moment a plant, warehouse or retail estate changes hands quietly and needs somebody watching it. Texas governs this with a statute passed in 1967 and never amended since, and three of its requirements routinely surprise firms that do this work in other states.

The Assignee Has to Live There

Tex. Bus. & Com. Code § 23.16(a) is the first filter: "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."

Two conditions, not one. Texas residency, and residency in the specific county tied to the debtor. A national restructuring firm cannot simply name its own officer; a Texas ABC needs a local assignee, which means a Dallas filing and a Houston filing need different people unless the debtor's connection to one county covers both.

The effect on the field is practical rather than theoretical. The person with authority over a vacant industrial site is, by statute, local - and they are frequently administering their first estate of that type.

Recorded Like a Deed, in Every County

The assignment is a recorded instrument twice over. Section 23.08(a) sets validity requirements: the debtor must make the assignment in writing, and it "must be proved or acknowledged and recorded in the manner provided by law for the conveyance of real estate." It is recorded like a deed because it moves real property.

Section 23.16(b) then puts an immediate duty on the assignee: "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."

For a business with sites in several counties that is a recording programme, not a filing. And it is the first reliable public signal that a commercial estate has changed hands - often before anyone has been to the buildings.

The assignment also arrives with a schedule. Section 23.08(b) requires the debtor to attach a sworn inventory listing each creditor, the address and amount owed, the consideration and place the debt arose, each existing judgment or security, "a schedule of all the assigning debtor's real and personal estate at the date of the assignment," a description of each encumbrance and of each voucher and security, and the value of the estate. Subsection (c) requires the debtor to sign it and swear it is just and true.

Five Days, a Bond, and Only Then Possession

Section 23.16(c) gives the assignee five days from delivery of the assignment instrument to execute a bond: with a surety approved by the judge of either the county or district court in the county of the assignee's residence; conditioned on faithful performance of the assignee's duties and proportionate distribution of the net proceeds to consenting creditors; in an amount fixed by the county or district judge; payable to the state; and inuring to the benefit of the debtor and each creditor.

Then the sequence that matters operationally. Section 23.16(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."

Possession follows the bond. Until the bond is filed there is a valid assignment, a recorded instrument, and an assignee with no statutory warrant to take hold of anything - and in the meantime the buildings sit. That gap is the window in which a commercial site is most exposed and least supervised, and it is created by the statute rather than by anyone's inattention.

Section 23.16(e) confirms the assignment survives a missed bond: it "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)." But § 23.18(a)(1) makes that failure a removal ground, on which the court "shall remove or replace the assignee" on application of the debtor or a creditor or on its own motion - and § 23.18(c) has the replacement take possession "as soon as" the new bond is executed and filed.

Notice, and the Clocks It Starts

Section 23.17 requires the assignee, within 30 days after the assignment is executed, to publish notice of the appointment in a newspaper published in the county where the debtor resides or operated its principal business - or in the nearest county with a newspaper if there is none - once each week for three consecutive weeks, and to notify each listed creditor by mail.

That publication starts the creditor clocks. Under § 23.30(a) a creditor must inform the assignee in writing of consent within four months after the § 23.17 notice, and under § 23.31(a) a consenting creditor must file a sworn statement of claim within six months after first publication - failing which, under § 23.31(c), they receive nothing. Section 23.32(b) gives the debtor or a creditor eight months from first publication to sue to set aside an allowance.

Who Pays for Securing the Buildings

Section 23.21 is short and is the provision a vendor's invoice ultimately runs through: 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."

Three things follow. Securing, mothballing and maintaining an assigned site is capable of being a "necessary expense" - the statute does not enumerate, so the category is open. The amount is not settled between the assignee and the vendor; it is fixed by the court that approved the bond. And it is paid out of the assigned estate, so it competes with everything else the estate owes.

Section 23.33 confirms where those expenses sit relative to creditors: a nonconsenting creditor may garnishee the assignee only for the excess remaining after the assignee has paid each consenting creditor the allowed amount of their claim and "the expense of carrying out the assignment." Expenses of administration come before the surplus.

The practical consequence is the same one that runs through every fiduciary regime in this series: a cost that is documented, dated and tied to a scope the court can recognise as necessary is a cost that survives. One that arrives as a lump sum at the end does not.

Closing Out

Section 23.19 requires the assignee to distribute each time there is enough money to pay ten per cent of the debts. Section 23.23 has an assignee seeking discharge file for record with the county clerk of the county where the assignment is recorded a sworn report describing all property that came into their possession and how and to whom it was distributed, and deposit any remaining estate money in the registry of the court that approved the bond.

Section 23.24 then closes the exposure: an action against an assignee based on conduct shown in that report "must be brought within 12 months after the report is filed or the action is barred."

What This Means If You Do the Work

• Your counterparty is a local individual by statute - a Texas resident who also resides in the debtor's county or the county of its principal business
• Expect the assignment to be recorded in every county holding real property, which is the earliest public signal that a multi-site commercial estate has moved
• Nothing can be taken into possession until the bond is filed; the five-day bond window is the period of greatest exposure for a vacant site
• The sworn inventory under § 23.08(b) already lists the real estate, its encumbrances and its value - ask for it rather than rebuilding the picture from scratch
• Your costs are paid out of the assigned estate as the assignee's "necessary expenses," but the amount is fixed by the county or district court that approved the bond
• Expenses of carrying out the assignment rank ahead of any surplus available to nonconsenting creditors under § 23.33
• The assignee's own exposure closes 12 months after the final report is filed, so records should outlive the engagement by at least that long

For the state that replaced this kind of statute with a modern uniform act, see Alabama's Uniform Assignment for Benefit of Creditors Act, in force since 1 October 2026. For the two other old statutes in the footprint, see Ohio, where the probate court runs it and expenses need a bill of items Oklahoma, where an unrecorded assignment is void against creditors after twenty days, and Arkansas, where preservation is the assignee's first statutory duty. Texas's other regimes where someone other than the owner holds a building are covered separately: the two nuisance receiverships, a chapter 7 trustee's duty to preserve estate property and what a tax-sale purchaser can recover. For commercial scope specifically, see commercial property maintenance and our Texas page.