5.__Exclusive remedy for judgment creditor.__This section provides the exclusive remedy by which a judgment creditor of a partner or partner's transferee may satisfy a judgment out of the judgment debtor's transferable interest in the partnership.

Comment

(This is Section 504 of the Uniform Partnership Act (1997).)

1. Section 504 continues the UPA Section 28 charging order as the proper remedy by which a judgment creditor of a partner may reach the debtor's transferable interest in a partnership to satisfy the judgment. Subsection (a) makes the charging order available to the judgment creditor of a transferee of a partnership interest. Under Section 503(b), the transferable interest of a partner or transferee is limited to the partner's right to receive distributions from the partnership and to seek judicial liquidation of the partnership. The court may appoint a receiver of the debtor's share of the distributions due or to become due and make all other orders that may be required.

2. Subsection (b) is new and codifies the case law under the UPA holding that a charging order constitutes a lien on the debtor's transferable interest. The lien may be foreclosed by the court at any time, and the purchaser at the foreclosure sale has the Section 503(b) rights of a transferee. For a general discussion of the charging order remedy, see I Alan R. Bromberg & Larry E. Ribstein, Partnership (1988), at 3:69.

3. Subsection (c) continues the UPA Section 28(2) right of the debtor or other partners to redeem the partnership interest before the foreclosure sale. Redemption by the partnership (i.e., with partnership property) requires the consent of all the remaining partners. Neither the UPA nor RUPA provide a statutory procedural framework for the redemption.

4. Subsection (d) provides that nothing in RUPA deprives a partner of his rights under the State's exemption laws. That is essentially the same as UPA Section 28(3).

5. Subsection (e) provides that the charging order is the judgment creditor's exclusive remedy. Although the UPA nowhere states that a charging order is the exclusive process for a partner's individual judgment creditor, the courts have generally so interpreted it. See, e.g., Matter of Pischke, 11 B.R. 913