Cascading Charging Orders


A cascading charging order is one that attempts to place a charging order lien upon an LLC or partnership interest that is owned by another LLC or partnership interest which is owned by the debtor.

So, debtor owns an interest in LLC-A, and LLC-A owns an interest in LLC-B. A judgment creditor applies for a charging order against the interest in LLC-A and in LLC-B. This is improper; the charging order may only be issued against the debtor's interest in whatever LLC the debtor owns, being LLC-A only, but not against an LLC interest not owned by a debtor, meaning that the charging order against LLC-B would be improper.