New Jersey Charging Order
N.J.S. 42:1A-30. 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 order charging the transferable interest of a partner or of a partner's transferee shall be the sole remedy of a judgment creditor, who shall have no right under this act or any other State law to interfere with the management or to force dissolution of the partnership or to seek an order of the court requiring a foreclosure sale of the transferable interest. 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 make all other orders, directions, accounts, and inquiries the judgment debtor might have made or which the circumstances of the case may require.
b. A charging order constitutes a right to receive distributions made with respect to the judgment debtor's transferable interest in the partnership.
c. At any time before foreclosure, an interest charged may be redeemed:
(1) by the judgment debtor;
(2) with property other than partnership property, by one or more of the other partners; or
(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 act 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.
N.J.S. 42:2A-48. Rights of judgment creditor of a partner
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 partnership interest. This chapter does not deprive any partner of the benefit of any exemption laws applicable to his partnership interest.
LIMITED LIABILITY COMPANIES
N.J.S. 42:2C-43. Rights of judgment creditor of a member
On application by a judgment creditor of a member, a court may charge the transferable interest of the member 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 limited liability company interest. An action by a court pursuant to this section does not deprive any member of the benefit of any exemption laws applicable to his transferable interest. A court order charging the transferable interest of a member pursuant to this section shall be the sole remedy of a judgment creditor, who shall have no right under 42:2C-1 et seq. or any other State law to interfere with the management or force dissolution of a limited liability company or to seek an order of the court requiring a foreclosure sale of the transferable interest. Nothing in this section shall be construed to affect in any way the rights of a judgment creditor of a member under federal bankruptcy or reorganization laws.
by Jay Adkisson
2020.06.20 ... Payment Of Distributions Directly To Creditor Holding A Charging Order Deemed Appropriate In BMO Case
2020.04.30 ... Charging Order Denied For Lack Of Proof Of The Debtor's Interest In Dhillon
2020.02.29 ... Florida Charging Order Requires Distributions To Be Re-Directed To The Creditor In Kostoglou
More Articles On Charging Orders click here
LAW REVIEW ARTICLES
by Jay Adkisson
For more on the historical background of Charging Orders and contemporary issues involving the same, see Jay Adkisson's article, Charging Orders: The Peculiar Mechanism, 61 South Dakota Law Review 440 (2016). Available at SSRN: https://ssrn.com/abstract=2928487
Analysis of Uniform Limited Liability Company Act Sections re Charging Orders
The Uniform Acts re Charging Orders and Transferable Interests (without Jay's comments):
Effect of Bankruptcy On The Debtor-Member's LLC Interest here
Collected Court Opinions On Charging Orders here and below
Appeal - Issues relating to the appeal of a charging order
Bankruptcy - Treatment of the debtor/member's interest in bankruptcy
Compliance - Issues for the LLC and non-debtor members in complying with a charging order
Conflicts-Of-Law - Determining which state's laws apply to a charging order dispute
Creditor Rights Restrictions - Limitations on creditors' management and informational rights
Distributions - Creditors rights to distributive payments
Economic Rights - Limitation of charging order and foreclosure to debtor's economic rights
Exclusivity - The charging order as the sole remedy available to creditors and exceptions
Exemptions - Available state and federal protections that may apply to charging orders
Foreclosure - Liquidation by judicial sale of the debtor's right to distributions
Foreign Entities - Charging orders against out-of-state entities
Information Rights - Creditors' ability to access information about the LLC
Intra-Member Disputes - Where one member obtains a charging order against another
Jurisdiction - Issues relating to the court's authority over out-of-state debtors and LLCs
Lien - The lien effect of a charging order and priority issues
Management & Voting Rights - Rights of creditor after charging order issued
Order Form Generally - Most issues to the form of the charging order
Order Form Future Interests - How the charging order affects subsequently-acquired interests
Prejudgment Relief - Freezing the interest and distributions pending judgment
Procedure - The procedure for obtaining a charging order and ancillary provisions
Receiver - The role of the receiver in charging order proceedings
Repurchase/Redemption Rights - Third-parties' ability to purchase the charged interest
Single-Member LLCs - Enforcing the judgment against an LLC with a sole member
Taxes - Tax issues relating to charging orders for all involved parties
Unknown Interest - Where the debtor's interest, if any, has not been ascertained
Voidable Transactions/Fraudulent Transfers - Issues relating to avoidable transfers of interests
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Additional Court Opinions About charging orders (unsorted)
THE CHARGING ORDERS PRACTICE GUIDE
The Charging Order Practice Guide: Understanding Judgment Creditor Rights Against LLC Members, by Jay D. Adkisson (2018), published by the LLCs, Partnerships and Unincorporated Entities Committee of the Business Law Section of the American Bar Association, click here for more
Available for purchase directly from the ABA at https://goo.gl/faZzY6
Also available from Amazon at https://www.amazon.com/Charging-Orders-Practice-Guide-Understanding/dp/1641052643
OTHER INFORMATIONAL WEBSITES
by Jay Adkisson
Contact Jay Adkisson:
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© 2020 Jay D. Adkisson. All Rights Reserved. No claim to government works or the works of the Uniform Law Commission. The information contained in this website is for general educational purposes only, does not constitute any legal advice or opinion, and should not be relied upon in relation to particular cases. Use this information at your own peril; it is no substitute for the legal advice or opinion of an attorney licensed to practice law in the appropriate jurisdiction. This site is https://chargingorder.com Contact: jay [at] jayad.com or by phone to 702-953-9617 or by fax to 877-698-0678.