Transferable Interest - Distributions And Economic Rights
Topic Transferable_Interest TopicsTransferableInterest
Courts frequently struggle with three issues in regard to the transferable rights, a/k/a distributional or economic rights of the debtor/member ("D/M"):
1. What constitutes the D/M's rights that are subject to the charging order.
2. The effect of a charging order on the D/M's rights.
3. The effect of a foreclosure on the D/M's rights.
What constitutes the D/M's rights that are subject to the charging order? The confusion here arises from the general structure of the Harmonized Acts, which require a court to look outside the creditor's rights Article to other parts of the particular Act to make the determination that only the D/M's distributional rights are implicated. This can be fixed by a better explanatory Comment.
The effect of a charging order on the D/M's rights? The current language of § 503(a) states that "a charging order constitutes a lien on a judgment debtor’s transferable interest . . .." The phrase "transferable interest" requires the court to then determine what that means, an eventually ends up a lien being placed on the "distributional interest". That the lien is on the "distributional interest" should be better spelled out in the Comment.
The effect of a foreclosure on the D/M's rights? Similarly, § 503(c) talks about "transferable interest" when "distributional interest" would be more clear.
TRANSFERABLE INTEREST ARTICLES
- 2012.03.06 ... Weddell: Nevada Supreme Court Restricts Charging Order To Debtor's Economic Interests Only
DISTRIBUTIONS AND ECONOMIC RIGHTS OF DEBTOR/MEMBER
- BMO Harris Bank N.A. v. Smith, 2020 WL 2914838 (June 3, 2020).
- First Bank v. S&R Grandview, L.L.C., 2014 WL 846671 (N.C.App., 2014).
- Kostoglou v. Fortuna, 2020 WL 813366 (Fla.App., Feb. 19, 2020).
- P-C Palladio, LLC v. Nassi, 2014 WL 584315 (S.D.N.Y., Feb. 14, 2014).
- Pansky v. Barry S. Franklin & Assoc., 2019 WL 581620 (Fla.App., Feb. 13, 2019).
- Statute ~ Definition Of Distribution
- Statute ~ Transfer Of Transferable Interest
- Weddell v. H2O, Inc., 128 Nev.Adv.Op. #9 (Nev., Mar. 1, 2012).
- Wholesaler Equity Development Corp. v. Bargreen, 2021 WL 321560 (W.D.Wa., Feb. 1, 2021).