| (1) |
On application by a judgment creditor of a partner or transferee, a court may enter a charging order against the transferable interest of the judgment debtor for the unsatisfied amount of the judgment. A charging order constitutes a lien on a judgment debtor’s transferable interest and, after the limited partnership has been served with the charging order, requires the limited partnership to pay over to the person to which the charging order was issued any distribution that otherwise would be paid to the judgment debtor. |
Terms Used In Utah Code 48-2e-703
- Distribution: means a transfer of money or other property from a limited partnership to a person on account of a transferable interest or in the person's capacity as a partner. See Utah Code 48-2e-102
- Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
- Lien: A claim against real or personal property in satisfaction of a debt.
- Limited partnership: means an entity formed under this chapter or which becomes subject to this chapter under 11, or Section 48-2e-1205. See Utah Code 48-2e-102
- Partner: means a limited partner or general partner. See Utah Code 48-2e-102
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Person: means an individual, business corporation, nonprofit corporation, partnership, limited partnership, limited liability company, limited cooperative association, unincorporated nonprofit association, statutory trust, business trust, common-law business trust, estate, trust, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. See Utah Code 48-2e-102
- Transferable interest: means the right, as initially owned by a person in the person's capacity as a partner, to receive distributions from a limited partnership in accordance with the partnership agreement, whether or not the person remains a partner or continues to own any part of the right. See Utah Code 48-2e-102
- Transferee: means a person to which all or part of a transferable interest has been transferred, whether or not the transferor is a partner. See Utah Code 48-2e-102
| (2) |
To the extent necessary to effectuate the collection of distributions pursuant to a charging order in effect under Subsection (1), the court may:
| (a) |
appoint a receiver of the distributions subject to the charging order, with the power to make all inquiries the judgment debtor might have made; and |
| (b) |
make all other orders necessary to give effect to the charging order. |
|
| (3) |
Upon a showing that distributions under a charging order will not pay the judgment debt within a reasonable time, the court may foreclose the lien and order the sale of the transferable interest. The purchaser at the foreclosure sale obtains only the transferable interest, does not thereby become a partner, and is subject to Section 48-2e-702. |
| (4) |
At any time before foreclosure under Subsection (3), the partner or transferee whose transferable interest is subject to a charging order under Subsection (1) may extinguish the charging order by satisfying the judgment and filing a certified copy of the satisfaction with the court that issued the charging order. |
| (5) |
At any time before foreclosure under Subsection (3), a limited partnership or one or more partners whose transferable interests are not subject to the charging order may pay to the judgment creditor the full amount due under the judgment and thereby succeed to the rights of the judgment creditor, including the charging order. |
| (6) |
This chapter does not deprive any partner or transferee of the benefit of any exemption law applicable to the transferable interest of the partner or transferee. |
| (7) |
This section provides the exclusive remedy by which a person seeking to enforce a judgment against a partner or transferee may, in the capacity of judgment creditor, satisfy the judgment from the judgment debtor’s transferable interest. |
Enacted by Chapter 412, 2013 General Session
