Michigan Charging Order Statutes And Opinions
Michigan Charging Order
- GENERAL PARTNERSHIPS: M.C.L. 449.28. Partner's interest subject to charging order
- LIMITED PARTNERSHIPS: M.C.L. 449.1703. Judgment creditors; rights as assignee of partnership interest
- LIMITED LIABILITY COMPANIES: M.C.L. 450.4507. Satisfaction of judgment out of member’s membership interest by judgment creditor
M.C.L. 449.28. Partner's interest subject to charging order
(1) On due application to a competent court by any judgment creditor of a partner, the court which entered the judgment, order, or decree, or any other court, may charge the interest of the debtor partner with payment of the unsatisfied amount of such judgment debt with interest thereon; and may then or later appoint a receiver of his share of the profits, and of any other money due or to fall due to him in respect of the partnership, and make all other orders, directions, accounts and inquiries which the debtor partner might have made, or which the circumstances of the case may require;
(2) The interest charged may be redeemed at any time before foreclosure or in case of a sale being directed by the court may be purchased without thereby causing a dissolution:
(a) With separate property, by any 1 or more of the partners, or
(b) With partnership property, by any 1 or more of the partners with the consent of all the partners whose interests are not so charged or sold;
(3) Nothing in this act shall be held to deprive a partner of his right, if any, under the exemption laws, as regards his interest in the partnership.
M.C.L. 449.1703. Judgment creditors; rights as assignee of partnership interest
Upon 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 partnership interest. This act does not deprive any partner of the benefit of any exemptions provided by law applicable to his or her partnership interest.
LIMITED LIABILITY COMPANIES
M.C.L. 450.4507. Satisfaction of judgment out of member’s membership interest by judgment creditor
(1) If a court of competent jurisdiction receives an application from any judgment creditor of a member of a limited liability company, the court may charge the membership interest of the member with payment of the unsatisfied amount of judgment with interest.
(2) If a limited liability company is served with a charging order and notified of the terms of that order, then to the extent described in the order, the member's judgment creditor described in the order is entitled to receive only any distribution or distributions to which the judgment creditor is entitled with respect to the member's membership interest.
(3) This act does not deprive any member of the benefit of any exemption laws applicable to the member's membership interest.
(4) Unless otherwise provided in an operating agreement or admitted as a member under section 501,1 a judgment creditor of a member that obtains a charging order does not become a member of the limited liability company, and the member that is the subject of the charging order remains a member of the limited liability company and retains all rights and powers of membership except the right to receive distributions to the extent charged.
(5) A charging order is a lien on the membership interest of the member that is the subject of the charging order. However, a person may not foreclose on that lien or on the membership interest under this act or any other law, and the charging order is not an assignment of the member's membership interest for purposes of section 505(4).2
(6) This section provides the exclusive remedy by which a judgment creditor of a member may satisfy a judgment out of the member's membership interest in a limited liability company. A court order to which a member may have been entitled that requires a limited liability company to take an action, provide an accounting, or answer an inquiry is not available to a judgment creditor of that member attempting to satisfy a judgment out of the member's membership interest, and a court may not issue an order to a judgment creditor.