Code of Virginia

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Code of Virginia
Title 8.01. Civil Remedies and Procedure
Chapter 18.1. Assignments for Benefit of Creditors
1/19/2021

Article 1. Assignment of Property.

§ 8.01-525.1. Recordation; notice of sale; preferences prohibited.

Whenever a deed of assignment for the benefit of creditors is executed, the deed shall be recorded. If no notice of the sale has previously been given, the trustee named in such deed, or the one substituted in the manner prescribed in this article, before selling under the deed of assignment, shall, at least 10 days before the sale, notify each of the creditors named in the deed by certified mail, return receipt requested, advising of (i) the execution of such sale; (ii) when, where, and how the sale will be held; (iii) the terms of such sale; and (iv) whether or not the deed provides that acceptance shall be in full satisfaction. No creditor shall be preferred in the deed except those given a lien or preference by law, or those having a valid lien upon the property conveyed, or some part of such lien, and those having a lien shall be preferred only to the extent of the value of the property upon which they have a lien.

1924, p. 657; Michie Code 1942, § 5278b; Code 1950, § 55-156; 2019, c. 712.

§ 8.01-525.2. Substitution of another trustee by creditors.

A majority of the unsecured creditors in number and amount of the assignor may agree in writing upon a trustee different from the one named in the deed of assignment, and upon petition to the court that would have jurisdiction if an action were brought against the assignor, such agreed trustee may be substituted in lieu of such named trustee with all of the rights, powers, and duties conferred upon such named trustee in the deed of assignment. The clerk of the court where the deed of assignment is recorded shall record such order presented by one of the parties and shall include a reference to the order book and page where such deed is recorded, together with the name of the substituted trustee, and shall make proper indexing. The substitute trustee shall reside in the county or city in which the property that is conveyed in the deed of assignment or the greater portion thereof in value is located.

1924, p. 657; Michie Code 1942, § 5278c; Code 1950, § 55-157; 2014, c. 330; 2019, c. 712.

§ 8.01-525.3. Procedure to question claim of creditor.

Any creditor of the assignor who questions the validity of any other creditor's claim, or the trustee if he questions the validity of any claim, may file, within 30 days after the recordation of the deed, a petition against the creditor whose claim is questioned in the court that would have jurisdiction if the action was brought by the creditor whose claim is questioned against the assignor, and the burden of proof shall be upon the creditor whose claim is questioned. Upon the filing of such petition, the court may order the party whose claim is questioned to appear to defend such claim and the court shall determine the matter in a summary way.

1924, p. 658; Michie Code 1942, § 5278c; Code 1950, § 55-158; 2019, c. 712.

§ 8.01-525.4. Provision to bar further claim by creditors who accept deed.

Any deed of assignment may contain a provision to the effect that those creditors who accept such assignment do so in full satisfaction of their respective claims and shall be forever barred from further recovery of any balance.

1924, p. 658; Michie Code 1942, § 5278d; Code 1950, § 55-159; 2019, c. 712.

§ 8.01-525.5. Compensation of trustee.

Every trustee referred to in this article shall receive reasonable compensation for services.

1924, p. 658; Michie Code 1942, § 5278d; Code 1950, § 55-160; 2019, c. 712.