What is an "Assignment"?

An agreement to make periodic future payments to injured plaintiffs means the creation of a long-term financial obligation. In order for the plaintiff to receive payments over time, someone has to remain on the hook to make them.

Defendants and insurers are not interested in adding new liabilities to the books. They want a full and final release and the extinguishment of all liabilities related to the claim.

A solution was developed to solve this problem: it is resolved by "novation", the substitution of one party for another in a contract. The settlement agreement itself will first establish the liability for future payments, then reserve the right of the defendant to "assign" the obligations to a third party, in accordance with IRC Section 130 (the tax code section that governs these transactions).

Contemporaneous with the execution of the Settlement Agreement, the parties also execute an "Assignment Agreement" to achieve this result. (See also "Structure Of The Deal")