Asset Liquidation Agreement (ALA)

Occasionally, a financial institution will bomb. When that happens, the Federal Deposit Insurance Corporation will contract with private companies to manage the assets of the business. This kind of process started in 1980s and 1990s because the FDIC wanted to move along with dismantling failed banks as fast as possible to protect the deposit insurance fund.

ALAs can also be done when partners want to dissolve a business, by filing with the Department of Treasury and county clerk's office. The contractor is paid for their expenses (accounting, reporting and legal fees, for example) and given an incentive fee, meaning the more they collected by liquidating the assets, the more they earned. A commission of sorts.