The need for careful drafting of participation agreements between banks was brought home by the Utah Supreme Court’s ruling in Holladay Bank & Trust v. Gunnison Valley Bank, 2014 UT App 17, 2014 WL 266289 (Utah App. 2014). In Holladay Bank, Gunnison Valley Bank and Holladay Bank entered into a participation agreement relating to a substantial loan extended by Gunnison for the construction of a luxury home. The participation agreement provided that Gunnison fund its portion of the loan first, and Holladay fund its portion last. Gunnison foreclosed following the borrower’s default, and a dispute arose between the banks over the allocation of the sales proceeds which were insufficient to cover the loan. Litigation between the banks ensued. The participation agreement provided in one section that, “as the Borrower repays the loan,” Holladay would receive all principal payments pursuant to the “last in, first out” provisions of the agreement, until its principal was paid in full, with Gunnison to receive principal payments thereafter. Another section of the agreement provided that, after payment of collection costs to Gunnison, all amounts received were to be divided between the banks in accordance with their respective percentages of ownership interest in the loan.