The Charging Orders Practice Guide: Understanding Judgment Creditor Rights Against LLC Members

Limited Liability Companies (LLCs) have become the predominant form of business entity created for American businesses, now far surpassing annually the numbers of new corporations. Among the features that have made LLCs attractive is that membership interests in an LLC are not subject to the traditional remedies, such as Writs of Levy, that have long been available to the creditors of shareholders. Instead, a creditor's recovery against the LLC interest of debtor is restricted to a heretofore little discussed remedy known as a "charging order."

Corresponding to the rise of LLCs, creditor-debtor litigation involving LLC membership interests has likewise increased in volume. This has created a need for all concerned parties, meaning creditors, debtors, non-debtor members, the LLC, and even potential third-party buyers of LLC interests at a foreclosure sale of charging orders, to be able to come up-to-speed quickly on the subject of charging order. Thus, the LLCs, Partnerships and Unincorporated Entities Committee of the ABA's Business Law Section presents The Charging Orders Practice Guide to give readers a source of both the legal theory underlying charging orders and pragmatic suggestions as to how to deal with them from all viewpoints.

The Charging Orders Practice Guide discusses a broad array of issues involving this remedy, including:

• The history and legal theory which underpins charging orders
• Creditor's strategies and tactics for obtaining charging orders and using them for maximum effect to enforce judgments
• Step-by-step guidance to obtaining and enforcing a charging order
• Debtor defenses to a charging order
• Counseling an LLC on how to respond to a charging order
• Charging orders and single-member LLCs
• Intra-member disputes involving charging orders
• The charging order in bankruptcy
• Tax issues as seen through the eyes of all the parties to charging order litigation
• And much more!

 

BONUS: Appendices include sample charging order documents, plus both of Professor Carter Bishop's widely-cited fifty-state tables listing state statutes and the most important charging order decisions.

Jay D. Adkisson, California partner at Riser & Adkisson, LLP, nationally recognized expert in creditor rights litigation, co-author of best-selling book on the topic of asset protection planning, "The Asset Protection Book," and author of the asset protection planning blog, www.assetprotectionbook.com.