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Panel backs uniform assignment-for-benefit-of-creditors law to ease liquidation for small businesses
Summary
HB382 would adopt a uniform Assignment for the Benefit of Creditors process to give distressed businesses a less costly, flexible liquidation alternative to bankruptcy. The committee favorably recommended the bill 8–1.
Representative Tuscher presented HB382, a Uniform Law Commission model to modernize Utah's assignment-for-benefit-of-creditors statute. The sponsor and draft experts said the uniform act preserves creditor protections while making the process faster and less costly for many small businesses compared with federal bankruptcy. The measure clarifies assignee fiduciary duties, a claim-resolution process, notice timing for creditors and recognition of assignments when assets exist across state lines.
Edwin Smith, an expert who participated in drafting the uniform act, told the committee the current Utah statute is rarely used because of rigid court supervision and procedural burdens. He said the new law reduces upfront court requirements while preserving judicial review for parties who claim injury, and builds trust protections for buyers from assignees.
Representative Cutler asked how assignee powers compare to a bankruptcy trustee. Smith replied that bankruptcy trustees have broader powers (e.g., assuming and assigning unperformed contracts, recovering certain preferences), while an assignee is a fiduciary in a liquidation procedure that lacks some bankruptcy tools but remains an important, lower-cost alternative.
Without substantive debate, Representative Keller moved a favorable recommendation and the committee forwarded HB382 to the full House with an 8–1 recorded vote; Representative Hansen was recorded as the lone no vote.
