Intra-Member Judgments And Charging Orders

Topic Intramember TopicsIntramemberDisputes

The Harmonized Acts provide little guidance in the area of intra-member disputes, i.e., where one member obtains a judgment and charging order against the interest of another member. In that circumstance, there is an issue whether charging order exclusivity should apply to limit the creditor/member's remedy to a charging order against the D/M's interest, since "Pick Your Partner" is not being violated.

Resolution of this issue may have significant effects upon the dynamics of the partnership, however, since it may or may not alter the voting powers of the members and also impact other members who are not party to the dispute.

This is an issue that the members should be empowered to address in the operating agreement, but it is also suggested that § 503 be amended to provide a default setting in the absence of resolution in the operating agreement (and almost no operating agreements address this subject).