Colorado § 7-60-128 - Interest subject to charging order.

§ 7-60-128. Interest subject to charging order.

(1) On due application to a court of competent jurisdiction by any judgment creditor of a partner, the court that entered the judgment, order, or decree, or any other court, may charge the interest of the debtor partner with payment of the unsatisfied amount of the judgment with interest thereon; and may then or later appoint a receiver of the debtor partner's share of the profits and of any other money due or to fall due to the debtor partner in respect of the partnership and make all other orders, directions, accounts, and inquiries that the debtor partner might have made, or that the circumstances of the case may require.

(2) The interest charged may be redeemed at any time before foreclosure or, in case of a sale being directed by the court, may be purchased without thereby causing a dissolution:

(a) With separate property by any one or more of the partners; or

(b) With partnership property by any one or more of the partners with the consent of all the partners whose interests are not so charged or sold.

(3) Nothing in this article shall be held to deprive a partner of the partner's right, if any, under the exemption laws, as regards the partner's interest in the partnership.

Source: L. 31: p. 659, § 28. CSA: C. 123, § 28. CRS 53: § 104-1-28. C.R.S. 1963: § 104-1-28. L. 2004: (1) and (3) amended, p. 1427, § 87, effective July 1.

ANNOTATION

Law reviews. For comment on Phillips v. Phillips (cited below), see 37 U. Colo. L. Rev. 425 (1965). For article, "Charging Partnership and LLC Interests To Satisfy Debts of Individuals", see 23 Colo. Law. 2743 (1994).

The "due application" referred to in this section means an application made to the court upon adequate notice to the persons whose rights might be adversely affected by the granting of the relief sought. Phillips v. Phillips, 155 Colo. 538, 400 P.2d 450 (1964); First Nat'l Bank v. District Court, 652 P.2d 613 (Colo. 1982).

Partner has no right to receivership. A partner has a right to an accounting, and in a proper case to a dissolution of the partnership, but no right to a receivership. Mann v. Friden, 132 Colo. 273, 287 P.2d 961 (1955).

Rather, receivership rests in discretion of the court. Equity will not lend its extraordinary aid of receivership for property of an alleged partnership, unless an actual partnership is shown; and then, it rests in the discretion of the court, since a receivership is an extraordinary remedy and should be exercised with the gravest of caution. Mann v. Friden, 132 Colo. 273, 287 P.2d 961 (1955).

Moreover, a receiver for a solvent going concerning cannot be appointed in the absence of a charge of fraud. Mann v. Friden, 132 Colo. 273, 287 P.2d 961 (1955).

Notice requirements. Where a sale of debtors' partnership interests would affect the partnerships themselves, as well as other partners who are not parties to this action, ordering such a sale without first providing notice and hearing to those who would be affected, is void under the notice requirements of subsection (1). First Nat'l Bank v. District Court, 652 P.2d 613 (Colo. 1982).

Method of apportioning payment to judgment creditors who obtain charging orders directed to same partnership interest should be parallel to the method of determining priority among judgment creditors who seek execution on other kinds of personal property. Union Colony Bank v. United Bank, 832 P.2d 1112 (Colo. App. 1992).

Trial court erred in issuing unsecured judgment creditor's charging order nunc pro tunc to the creditor's first writ of garnishment. Other judgment creditor which had charging order issued and served prior to time charging order was issued was entitled to full satisfaction of judgment from debtor's partnership interest. Union Colony Bank v. United Bank, 832 P. 2d 1112 (Colo. App. 1992).