Utah's debt repayment process puts transferred property under independent management

Debtors using this process sign an agreement transferring all covered property to an independent manager for repayment. Coverage includes Utah residents and organizations based in Utah or governed by Utah law. It also includes their wholly owned organizations and partly owned organizations they control that have no business location or employees and depend on their services. An individual's property protected from debt collection is excluded. Property barred from transfer under other law is excluded unless that law permits consent and consent is obtained. Managers cannot be creditors or closely connected to the debtor or its creditors. Allowed fees, prior services, and a noncontrolling stake in a publicly traded company do not alone disqualify them. The agreement must identify the property, explain payments and fees, and include the debtor's sworn statement that all covered property is being transferred. The rules apply to assignments made on or after May 6, 2026. An assignment is the transfer of covered property for repayment.

Managers notify creditors, provide a way to submit repayment claims, and follow rules for accepting or disputing them. These procedures cover people and organizations owed money by the debtor or with claims against transferred property. Known creditors must receive notice within 30 days of the agreement taking effect unless they waive notice in a signed record. Managers must also use reasonable means to reach unknown creditors. The claim deadline must be 90 to 210 days after the agreement takes effect. Managers may accept certain claims without formal proof or excuse late filing for a reasonable reason. Formal proof must describe and document the debt and be signed under penalty of perjury. Filing it accepts the court's authority and gives the manager the creditor's right to challenge improper transfers related to that claim. These rules apply to assignments made on or after May 6, 2026. Deadlines run from the last required signature unless the agreement sets a later start date.

Managers pay accepted claims in a required order and divide insufficient funds proportionally among equally ranked unsecured claims. Payments come from transferred property and its proceeds. A protected property-backed claim must have a legally protected lien, resist the manager's power to undo it, and not rank below the manager's lien. Protected property-backed debts come first unless their holders agree otherwise. Management costs follow, then federally preferred claims, eligible recent wages, and other debts without protected property backing. Wage priority covers earnings within 180 days before the earlier of the agreement taking effect or business closure. The cap is the greater amount allowed by applicable bankruptcy or other law. Enforceable agreements can lower a claim's rank. Certain claims tied to buying or selling ownership interests also rank lower. Late claims without an excused delay receive remaining funds only after earlier-ranked claims are paid in full. This payment order applies to assignments made on or after May 6, 2026.

Managers may operate businesses, borrow money, sell property, and pursue legal claims unless the agreement limits those powers. These powers concern transferred property and related debts or lawsuits. A lien is a legal claim against property that backs a debt. Managers must use their powers consistently with their duty to protect creditors' interests. They can challenge certain earlier transfers, but recoveries and some financial contracts face stated limits. A buyer acting in good faith takes property free of the manager's lien and lower-ranking liens even if the manager fails to follow the law or court requirements. Utah recognizes another state's assignment on an issue when the result is substantially similar. Courts may appoint eligible managers to handle related Utah property, subject to Utah's rules for out-of-state managers. These rules apply to assignments made on or after May 6, 2026.

Managers report their work and can face personal liability or court removal for failing their duties. Debtors, creditors, and other interested people may ask a court to resolve matters involving the assignment or its management. Agreements cannot waive core duties or excuse bad faith or reckless disregard of creditors. They may otherwise limit liability and require repayment funds to cover the manager's liability costs. Good-faith reliance on specified debtor records or information, or carefully chosen expert advice, can protect managers from liability. Courts may remove managers for misconduct, serious mismanagement, failure to follow the law, or when removal best serves creditors. Agreements or courts provide eligible replacements. For assignments made on or after May 6, 2026, financial reports are due at least every six months. The final accounting is due when the manager completes the duties.