Trusteeship Agreement for Failing Business


More Info
									This is an agreement that is entered into between a trustee and the debtor of a failing
business for the transfer of business assets. The debtor agrees that they will grant,
assign, or transfer to the trustee all business assets for the purpose of liquidation and
repayment of creditors. This agreement can be used by small businesses or other
entities that want to transfer their businesses assets to a trustee to satisfy creditors.
                                                      Trusteeship Agreement for Failing Business

       THIS TRUSTEESHIP AGREEMENT (the “Agreement”), is made this ____ day of
______________, 2_____, by and between ___________________, a company duly
incorporated under the laws of the State of ________________ (the “Debtor”) and
___________________ (the “Trustee”).

       WHEREAS, the Debtor is indebted to numerous creditors and the Debtor is unable to pay
such indebtedness due and owing to its creditors due to the financial condition of the Debtor;

        NOW THEREFORE, the in consideration of the premises and mutual covenants
contained herein, the Debtor hereby grants, assigns, transfers and sets over unto the Trustee, all
of the assets and undertaking of the Debtor to have and to hold in trust and to receive in trust and
to carry on the business of the Debtor for such period of time as the Trustee in its/his/her sole
discretion may deem for the best interests of the Debtor’s creditor, and to sell and liquidate the
aforementioned assets and undertaking of the Debtor, and to convert the same into money, on
such terms and at such prices as the Trustee sees fit and to collect all debts hereby assigned by
the Creditor, as may be collectible, and out of the proceeds of such sales and collections.

1.     The Trustee shall be entitled to receive any and all costs incurred in respect to the
       execution of this Agreement and carrying out the actions contemplated herein and to pay
       and discharge in full, all debts and liabilities of the Debtor and to pay any residue if any
       of the proceeds to the Debtor’s creditors with all interest which has accrued thereon.

2.     In the event the residue is not in an amount which is sufficient to pay the debts and
       liabilities with interest that has accrued thereon of the Debtor in full, the Trustee shall
       apply the residue to the Debtor’s debts and liabilities rateably and in proportion. Any
       lesser amount which is paid by the Trustee to a creditor of the Debtor shall be accepted
       by such creditor as “payment received in full”.

3.     In the event the Trustee pays all of the debts and liabilities of the Debtor including any
       interest accrued thereon and there remains a surplus in the residue, the Trustee shall pay
       to the Debtor such residue.

4.     The Debtor hereby nominates, constitutes and appoints the Trustee as its lawful attorney
       and the Trustee shall have full power and authority to do all acts and things which may be
       necessary in the premises to the full execution of the trust hereby created, and to ask and
       demand, recover and receive of and from all and every person or persons, all property,
       debts, and demands due, owing and belonging to the Debtor.

5.     The Trustee shall have the power and right to determine the validity of all claims made
       against the Debtor and shall have the power and right to arbitrate such matters.
6.    In the event that the Trustee dies, resigns or becomes incapacitated, the Debtor shall
      appoint a succeeding Trustee and such succeeding Trustee shall have and shall exercise
      all the power and authority under this Agreement and trust as was previously possessed
      by the Trustee.

7.    The Trustee shall keep books of account showing the receipts and disbursements, which
      shall be open for reasonable inspection during normal business hours.

8.    Nothing herein contained, in so far as a specific delegation of power to the Trustee is
      concerned, shall in any wise limit his or her general power as Trustee.

9.    The creditors executing this Agreement each agree that they shall not institute any
      proceeding at law or in equity or in bankruptcy against the Debtor, and that it will not
      become a party to any proceeding in bankruptcy against the Debtor.

10.   The Trustee does hereby accept the trust created by this Agreement and covenants and
      agree to fully perform the terms and conditions and obligations contained herein without
      compensation from the Debtor.

11.   The trust created herein shall continue and be in full force and effective until
      ____________________, at which time all property and assets remaining in the hands
      and possession of the Trustee shall be disposed of at public or private sale.

12.   Any creditor of the Debtor may become a party to this Agreement by signing the same or
      a copy, and all copies hereof shall be deemed one and the same instrument.

13.   The Debtor hereby acknowledges and agrees to execute and deliver any and all additional
      documents or instruments which may be necessary or desirable to carry out the intent of
      this Agreement.

14.   This Agreement shall be governed under the laws of the State of _______________
      applicable therein and as amended from time to time.

       IN WITHESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first written above.

Witness:                                          Trustee

           I have authority to bind the Company.

Witness:   Creditor

Witness:   Creditor

To top