S.B. 21
         UNINCORPORATED BUSINESS ENTITIES

Senate Committee Amendments

Amendment 1 January 23, 2013 4:04 PM



Senator John L. Valentine proposes the following amendments:

1.    Page 80, Line 2462 through Page 81, Line 2490 :    

             2462          48-1d-604. Charging order.
             2463          (1) On application by a judgment creditor of a partner or transferee, a court may enter a
             2464      charging order against the transferable interest of the judgment debtor for the unsatisfied
             2465      amount of the judgment.
{   A charging order constitutes a lien on a judgment debtor's

             2466      transferable interest and, after the partnership has been served with the charging order, requires
             2467      the partnership to pay over to the person to which the charging order was issued any
             2468      distribution that otherwise would be paid to the judgment debtor.
             2469          (2) To the extent necessary to effectuate the collection of distributions pursuant to a
             2470      charging order in effect under Subsection (1), the court may:
             2471          (a) appoint a receiver of the distributions subject to the charging order, with the power
             2472      to make all inquiries the judgment debtor might have made; and
             2473          (b) make all other orders necessary to give effect to the charging order.
             2474          (3) Upon a showing that distributions under a charging order will not pay the judgment
             2475      debt within a reasonable time, the court may foreclose the lien and order the sale of the
             2476      transferable interest. The purchaser at the foreclosure sale obtains only the transferable
             2477      interest, does not thereby become a partner, and is subject to Section 48-1d-603 .   }
  (2) If a partnership is served with a charging order and notified of the terms of that order, then to the extent described in the order, the person to whom the charging order was issued has the right to receive any distribution that otherwise would be paid to the judgment debtor.

(3) A charging order constitutes a lien on a judgment debtor's transferable interest. The charging order lien may not be foreclosed on under this chapter or any other law.  

             2478          (4)
{   At any time before foreclosure under Subsection (3), the   }        The       partner or transferee

             2479      whose transferable interest is subject to a charging order under Subsection (1) may extinguish
             2480      the charging order by satisfying the judgment and filing a certified copy of the satisfaction with
             2481      the court that issued the charging order.
             2482          (5)
{   At any time before foreclosure under Subsection (3), a   }        A       partnership or one or more

             2483      partners whose transferable interests are not subject to the charging order may pay to the
             2484      judgment creditor the full amount due under the judgment and thereby succeed to the rights of
             2485      the judgment creditor, including the charging order.
             2486          (6) This chapter does not deprive any partner or transferee of the benefit of any
             2487      exemption law applicable to the transferable interest of the partner or transferee.

             2488          (7)
{   This section provides   }        The entry of a charging order is       the exclusive remedy by which a person seeking to enforce a

             2489      judgment against a partner or transferee, in the capacity of judgment creditor, may satisfy the
             2490      judgment from the judgment debtor's transferable interest.
  No other remedy, including foreclosure on the judgment debtor's transferable interest or a court order for directions, accounts, and inquiries that the judgment debtor might have made, is available to the judgment creditor attempting to satisfy the judgment from the judgment debtor's transferable interest.

(8) No creditor of a partner or transferee has any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the partnership.  


2.    Page 144, Lines 4452 through 4457 :    

             4452          (ii) a third party that had done business with the partnership in the year before the
             4453      election took effect only if the third party knows or has received a notification of the election;
             4454     
{   and   }

             4455          (b) on and after January 1, 2016, to all third parties, but those provisions remain
             4456      inapplicable to any obligation incurred while those provisions were inapplicable under
             4457      Subsection (3)(a)(ii)
{   .   }        ; and

(c) with respect to a charging order entered against the transferable interest of a partner or transferee before the partnership becomes subject to this chapter the following rules apply:
(i) Section 48-1d-604 does not govern the charging order or the rights of the parties affected by the charging order;
(ii) the judgment creditor has the same rights in respect to the charging order as existed immediately before the partnership becomes subject to this chapter;
(iii) the court has the same power to appoint a receiver, and to make orders, directions, accounts, and inquiries, including the power to order the foreclosure of the judgment debtor's transferable interest, as existed immediately before the partnership becomes subject to this chapter; and
(iv) a purchaser at foreclosure sale of a judgment debtor's transferable interest has the same rights and powers as existed immediately before the partnership becomes subject to this chapter.  


3.    Page 191, Lines 5888 through 5916 :    

             5888          48-2e-703. Charging order.
             5889          (1) On application by a judgment creditor of a partner or transferee, a court may enter a
             5890      charging order against the transferable interest of the judgment debtor for the unsatisfied
             5891      amount of the judgment.
{   A charging order constitutes a lien on a judgment debtor's

             5892      transferable interest and, after the limited partnership has been served with the charging order,
             5893      requires the limited partnership to pay over to the person to which the charging order was
             5894      issued any distribution that otherwise would be paid to the judgment debtor.
             5895          (2) To the extent necessary to effectuate the collection of distributions pursuant to a
             5896      charging order in effect under Subsection (1), the court may:

             5897          (a) appoint a receiver of the distributions subject to the charging order, with the power
             5898      to make all inquiries the judgment debtor might have made; and
             5899          (b) make all other orders necessary to give effect to the charging order.
             5900          (3) Upon a showing that distributions under a charging order will not pay the judgment
             5901      debt within a reasonable time, the court may foreclose the lien and order the sale of the
             5902      transferable interest. The purchaser at the foreclosure sale obtains only the transferable
             5903      interest, does not thereby become a partner, and is subject to Section 48-2e-702 .   }
  (2) If a limited partnership is served with a charging order and notified of the terms of the order, then to the extent described in the order, the person to whom the charging order was issued has the right to receive any distribution that otherwise would be paid to the judgement debtor.

(3) A charging order constitutes a lien on a judgment debtor's transferable interest. The charging order lien may not be foreclosed on under this chapter or any other law.  

             5904          (4)
{   At any time before foreclosure under Subsection (3), the   }        The       partner or transferee

             5905      whose transferable interest is subject to a charging order under Subsection (1) may extinguish
             5906      the charging order by satisfying the judgment and filing a certified copy of the satisfaction with
             5907      the court that issued the charging order.
             5908          (5)
{   At any time before foreclosure under Subsection (3), a   }        A       limited partnership or one or

             5909      more partners whose transferable interests are not subject to the charging order may pay to the
             5910      judgment creditor the full amount due under the judgment and thereby succeed to the rights of
             5911      the judgment creditor, including the charging order.
             5912          (6) This chapter does not deprive any partner or transferee of the benefit of any
             5913      exemption law applicable to the transferable interest of the partner or transferee.
             5914          (7)
{   This section provides   }        The entry of a charging order is       the exclusive remedy by which a person seeking to enforce a

             5915      judgment against a partner or transferee may, in the capacity of judgment creditor, satisfy the
             5916      judgment from the judgment debtor's transferable interest.
  No other remedy, including foreclosure on the judgment debtor's transferable interest or a court order for directions, accounts, and inquiries that the judgment debtor might have made, is available to the judgment creditor attempting to satisfy the judgment from the judgment debtor's transferable interest.

(8) No creditor of a partnership or transferee has any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the limited partnership.
 


4.    Page 241, Line 7450 :    

             7450      existed immediately before July 1, 2014.
  (f) With respect to a charging order entered against the transferable interest of a partner or transferee before the limited partnership becomes subject to this chapter the following rules apply:

(i) Section 48-2e-703 does not govern the charging order or the rights of the parties affected by the

charging order;
the judgment creditor has the same rights in respect to the charging order as existed immediately before the limited partnership becomes subject to this chapter;
(iii) the court has the same power to appoint a receiver, and to make orders, directions, accounts, and inquiries, including the power to order foreclosure of the judgment debtor's transferable interest as existed immediately before the limited partnership becomes subject to this chapter; and
(iv) a purchaser at a foreclosure sale of a judgment debtor's transferable interest has the same rights and powers as existed immediately before the limited partnership because subject to this chapter.  



5.    Page 277, Line 8579 through Page 279, Line 8617 :    

             8579          48-3a-503. Charging order.
             8580          (1) On application by a judgment creditor of a member or transferee, a court may enter
             8581      a charging order against the transferable interest of the judgment debtor for the unsatisfied
             8582      amount of the judgment.
{   Except as otherwise provided in Subsection (6), a charging order

             8583      constitutes a lien on a judgment debtor's transferable interest and, after the limited liability
             8584      company has been served with the charging order, requires the limited liability company to pay
             8585      over to the person to which the charging order was issued any distribution that otherwise would
             8586      be paid to the judgment debtor.
             8587          (2) To the extent necessary to effectuate the collection of distributions pursuant to a
             8588      charging order in effect under Subsection (1), the court may:
             8589          (a) appoint a receiver of the distributions subject to the charging order, with the power
             8590      to make all inquiries the judgment debtor might have made; and
             8591          (b) make all other orders necessary to give effect to the charging order.
             8592          (3) Upon a showing that distributions under a charging order will not pay the judgment
             8593      debt within a reasonable time, the court may foreclose the lien and order the sale of the
             8594      transferable interest. Except as otherwise provided in Subsection (6), the purchaser at the
             8595      foreclosure sale only obtains the transferable interest, does not thereby become a member, and
             8596      is subject to Section 48-3a-502 .   }
  (2) If a limited liability company is served with a charging order and notified of the terms of that order, then to the extent described in the order, the person to whom the charging order was issued has the right to receive any distribution that otherwise would be paid to the judgment debtor.

(3) A charging order constitutes a lien on a judgment debtor's transferable interest. The charging order lien may not be foreclosed on under this chapter or any other law.  

             8597          (4)
{   At any time before foreclosure under Subsection (3), the   }        The       member or transferee

             8598      whose transferable interest is subject to a charging order under Subsection (1) may extinguish
             8599      the charging order by satisfying the judgment and filing a certified copy of the satisfaction with
             8600      the court that issued the charging order.
             8601          (5)
{   At any time before foreclosure under Subsection (3), a   }        A       limited liability company or

             8602      one or more members whose transferable interests are not subject to the charging order may

             8603      pay to the judgment creditor the full amount due under the judgment and thereby succeed to the
             8604      rights of the judgment creditor, including the charging order.
             8605          
{   (6) If a court orders foreclosure of a charging order lien against the sole member of a

             8606      limited liability company:
             8607          (a) the court shall confirm the sale;
             8608          (b) the purchaser at the sale obtains the member's entire interest, not only the member's
             8609      transferable interest;
             8610          (c) the purchaser thereby becomes a member; and
             8611          (d) the person whose interest was subject to the foreclosed charging order is
             8612      dissociated as a member.   }
             8613          
{   (7)   }        (6)       This chapter does not deprive any member or transferee of the benefit of any

             8614      exemption laws applicable to the transferable interest of the member or transferee.
             8615          
{   (8) This section provides   }        (7) The entry of a charging order is       the exclusive remedy by which a person seeking to enforce a

             8616      judgment against a member or transferee may, in the capacity of judgment creditor, satisfy the
             8617      judgment from the judgment debtor's transferable interest.
  No other remedy, including foreclosure on the judgment debtor's transferable interest or a court order of directions, accounts, and inquiries that the judgment debtor might have made, is available to the judgment creditor attempting to satisfy the judgment from the judgment debtor's transferable interest.

(8) No creditor of a member or transferee has any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the limited liability company.  


6.    Page 351, Lines 10849 through 10851 :    

             10849      operating agreement;
{   and   }

             10850          (c) the limited liability company has perpetual duration unless otherwise stated in the
             10851      limited liability company's articles of organization
{   .   }        ; and

(d) with respect to a charging order entered against the transferable interest of a member or transferee before the limited liability company becomes subject to this chapter, the following rules apply:
(i) Section 48-3a-503 does not govern the charging order or the rights of the parties affected by the charging order;
(ii) the judgment creditor has the same rights in respect to the charging order as existed immediately before the limited liability company becomes subject to this chapter;
(iii) the court has the same power to appoint a receiver, and to make orders, directions, accounts, and inquiries, including the power to order the foreclosure of the judgment debtor's transferable interest, as existed immediately before the limited liability company becomes subject to this chapter; and
(iv) a purchaser at a foreclosure sale of a judgment debtor's transferable interest has the same rights and powers as existed immediately before the limited liability company becomes subject to this chapter.  

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