Arizona Charging Order Statutes And Opinions

State StateArizona

Arizona Limited Liability Company Act

29-3501. Nature of transferable interest

A transferable interest is personal property.

29-3502. Transfer of transferable interest

A. A transfer, in whole or in part, of a transferable interest:

1. Is permissible.

2. Does not by itself cause a person's dissociation as a member or a dissolution and winding up of the limited liability company's activities and affairs.

3. Subject to section 29-3504, does not entitle the transferee to either of the following:

(a) Participate in the management or conduct of the company's activities and affairs.

(b) Except as otherwise provided in subsections B and C of this section, have access to records or other information concerning the company's activities and affairs.

B. A transferee has the right to receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled. Solely for a purpose that is reasonably related to the transferee's right to receive distributions, a transferee has the rights to information under section 29-3410, subsection B.

C. In a dissolution and winding up of a limited liability company, a transferee is entitled to an account of the company's transactions only from the date of dissolution.

D. A transferable interest may be evidenced by a certificate of the interest issued by a limited liability company in a record, and, subject to this section, the interest represented by the certificate may be transferred by a transfer of the certificate. A company may not issue a certificate of the interest in bearer form.

E. A limited liability company is not required to give effect to a transferee's rights under this section until the company knows or has notice of the transfer.

F. A transfer of a transferable interest in violation of a restriction on transfer is ineffective if the intended transferee has knowledge or notice of the restriction at the time of the transfer or if the restriction is set forth in an operating agreement embodied in a signed record.

G. Except as otherwise provided in section 29-3602, paragraph 4, subdivision (b), if a member transfers a transferable interest, the transferor retains the rights of a member other than the transferable interest transferred and retains all the duties and obligations of a member.

H. If a member transfers a transferable interest to a person that becomes a member with respect to the transferred interest, the transferee is liable for the member's obligations under sections 29-3403 and 29-3406 that are known to the transferee when the transferee becomes a member or that are set forth in an operating agreement embodied in a signed record.

29-3503. Charging order

A. On application by a judgment creditor of a member or transferee, a court may enter a charging order against the transferable interest of the judgment debtor for the unsatisfied amount of the judgment. A charging order requires the limited liability company to pay over to the person to which the charging order was issued any distribution that otherwise would be paid to the judgment debtor.

B. The member or transferee whose transferable interest is subject to a charging order under subsection A of this section may extinguish the charging order by satisfying the judgment and filing a certified copy of the satisfaction with the court that issued the charging order.

C. A limited liability company or one or more members whose transferable interests are not subject to the charging order may pay to the judgment creditor the full amount due under the judgment and thereby succeed to the rights of the judgment creditor, including the charging order.

D. This chapter does not deprive any member or transferee of the benefit of any exemption law applicable to the transferable interest of the member or transferee.

E. This section provides the exclusive remedy by which a person seeking in the capacity of judgment creditor to enforce a judgment against a member or transferee may satisfy the judgment from the judgment debtor's transferable interest.

Arizona Limited Partnership Act

29-339. Nature of partnership interest

A partnership interest is personal property.

29-340. Assignment of partnership interest

Except as provided in the partnership agreement, a partnership interest is assignable in whole or in part. An assignment of a partnership interest does not dissolve a limited partnership or entitle the assignee to become or to exercise any rights of a partner. An assignment entitles the assignee to receive, to the extent assigned, only the distribution to which the assignor would be entitled. Except as provided in the partnership agreement, a partner ceases to be a partner upon assignment of all his partnership interest.

29-341. Rights of judgment creditor

On application to a court of competent jurisdiction by any judgment creditor of a partner, the court may charge the partnership interest of the partner with payment of the unsatisfied amount of the judgment with interest. To the extent so charged, the judgment creditor has only the rights of an assignee of the partner's partnership interest. This chapter does not deprive any partner of the benefit of any exemption laws applicable to his partnership interest. This section provides the exclusive remedy by which a judgment creditor of a partner may satisfy a judgment out of the judgment debtor's interest in the partnership.

Arizona Revised Unifiorm Partnership Act

29-1041. Partner not co-owner of partnership property

A partner is not a co-owner of partnership property and has no interest in partnership property that can be transferred, either voluntarily or involuntarily.

29-1042. Partner's transferable interest in partnership

The only transferable interest of a partner in the partnership is the partner's share of the profits and losses of the partnership and the partner's right to receive distributions. The interest is personal property.

29-1043. Transfer of partner's transferable interest

A. A transfer, in whole or in part, of a partner's transferable interest in the partnership:

1. Is permissible.

2. Does not by itself cause the partner's dissociation or a dissolution and winding up of the partnership business.

3. Does not, as against the other partners or the partnership, entitle the transferee, during the continuance of the partnership, to participate in the management or conduct of the partnership business, to require access to information concerning partnership transactions or to inspect or copy the partnership books or records.

B. A transferee of a partner's transferable interest in the partnership has a right to:

1. Receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled.

2. Receive on the dissolution and winding up of the partnership business, in accordance with the transfer, the net amount otherwise distributable to the transferor.

3. Seek under section 29-1071, paragraph 6 a judicial determination that it is equitable to wind up the partnership business.

4. Exercise the rights under section 29-1071, paragraph 7.

C. In a dissolution and winding up, a transferee is entitled to an account of partnership transactions only from the date of the latest account agreed to by all of the partners.

D. On transfer, the transferor retains the rights and duties of a partner other than the interest in distributions transferred.

E. A partnership need not give effect to a transferee's rights under this section until it has notice of the transfer.

F. A transfer of a partner's transferable interest in the partnership in violation of a restriction on transfer contained in the partnership agreement is ineffective as to a person having notice of the restriction at the time of transfer.

29-1044. Partner's transferable interest subject to charging order

A. On application by a judgment creditor of a partner or of a partner's transferee, a court having jurisdiction may charge the transferable interest of the judgment debtor to satisfy the judgment. The court may appoint a receiver of the share of the distributions due or to become due to the judgment debtor in respect of the partnership and may make all other orders, directions, accounts and inquiries the judgment debtor might have made or that the circumstances of the case may require.

B. A charging order constitutes a lien on the judgment debtor's transferable interest in the partnership. The court may order a foreclosure of the interest subject to the charging order at any time. The purchaser at the foreclosure sale has the rights of a transferee.

C. At any time before foreclosure, an interest charged may be redeemed either:

1. By the judgment debtor.

2. With property other than partnership property, by one or more of the other partners.

3. With partnership property, by one or more of the other partners with the consent of all of the partners whose interests are not so charged.

D. This chapter does not deprive a partner of a right under exemption laws with respect to the partner's interest in the partnership.

E. 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.