Opinion 2012 California Wayfarer Aviation Foreign Entity Charging Order

Adkisson's CHARGING ORDERS The Creditor's Remedy Against A Debtor's Interest In An LLC Or Partnership Caution state law variances! Check currency of statutes!

 

2012 - California - Wayfarer Aviation

 

Wayfarer Aviation, Inc. v. The Halsey McLean Minor Revocable Trust, No. C 10-00165 (N.D.Cal., Sept. 18, 2012).

 

WAYFARER AVIATION, INC., Plaintiff,

 

v.

 

THE HALSEY MCLEAN MINOR REVOCABLE TRUST U/A/D 11/2/2004, Defendant.

 

No. C 10-00165 CRB.

 

United States District Court, N.D. California.

 

September 18, 2012.

 

[PROPOSED] CHARGING ORDER

 

CHARLES R. BREYER, District Judge.

 

Upon review of Plaintiff's Application For Order Charging Defendant/Judgment Debtor's Membership Interests In Limited Liability Companies, and for good cause shown, said Motion is hereby granted.

 

Pursuant to Cal Code Civ Proc sec. 708.310, the Court orders that the interest of the defendant and judgment debtor, The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004, in any of the following limited liability companies ("Parties Being Charged") is hereby charged and shall be applied toward satisfaction of the Judgment entered on March 24, 2011, against The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004 and in favor of the plaintiff and judgment creditor, Wayfarer Aviation, Inc., nka WAI Liquidating Co., Inc. ("Wayfarer"), in the amount of $608,619.55 (dckt. no. 38). The charging order shall include The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004's membership interests in:

 

* Fox Ridge Farms Holdings, LLC Principal Office: 530 E. Main Street Charlottesville, VA 22902 Fox Ridge Farms Holdings, LLC Registered Agent: David H. Pettit 530 E. Main Street Charlottesville, VA 22902 * Fox Ridge Farms Management, LLC Principal Office: 530 E. Main Street Charlottesville, VA 22902 Fox Ridge Farms Management, LLC Registered Agent: David H. Pettit 530 E. Main Street Charlottesville, VA 22902 * Fox Ridge Investments, LLC Principal Office: 2787 C S Farm Road Free Union, VA 22940 Fox Ridge Investments, LLC Registered Agent: David H. Pettit 530 E. Main Street Charlottesville, VA 22902 * Minor Management Services, LLC Registered Agent: CT Corporation System 818 West Seventh Street, 2nd Floor Los Angeles, CA 90017 * Minor/O'Brien Ventures I, L.L.C. Principal Office: 580 California Street, Suite 1600 San Francisco, CA 94140 Minor Stables, LLC Registered Agent: David Pettit 530 East Main Street Charlottesville, VA 22902 * Minor Ventures, LLC Registered Agent: CT Corporation System 818 West Seventh Street, 2nd Floor Los Angeles, CA 90017 Minor/O'Brien Ventures I, L.L.C. Registered Agent: CT Corporation System 818 West Seventh Street, 2nd Floor Los Angeles, CA 90017

 

Pursuant to Cal Corp Code sec. 17302(a), the Court specifically charges the assignable membership interest of The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004 in the Parties Being Charged to satisfy the Judgment in this case.

 

Pursuant to Cal Corp Code sec. 17302(b), this charging order constitutes a lien on the assignable membership interest of The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004 in the Parties Being Charged. The court may order a foreclosure on the membership interests subject to this charging order at any time.

 

The Court further orders that no distribution of income of any kind or any kind of income being revenue, profits, distributions or proceeds from the sale of the Parties Being Charged hereinbefore identified, whether it be real or personal property, fixtures, intangible property, income, revenue, profits or proceeds be disbursed to The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004, unless and until the Judgment balance, together with interest and costs, is paid to Wayfarer.

 

The Court further orders that The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004 shall account to Wayfarer upon Wayfarer's request an accounting of the The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004's interest in the Parties Being Charged, and shall further account to Wayfarer for any monies, property, goods and effect due and owing, or to be due and owing to The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004, by virtue of its membership interests and/or ownership interests in the Parties Being Charged.

 

The Court further orders that The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004 is restrained from transferring, attempting to transfer, distributing, crediting, alienating, signing, giving, pledging, hypothecating or otherwise disposing of any present existing equitable legal interest in the membership interests or otherwise in property, real, personal, mixed, tangible or intangible wheresoever located to any person or entity in said entities being the Parties Being Charged until such a time as Wayfarer's Judgment, together with interest and costs, has been satisfied, and without prior approval of the Court as the result of Wayfarer's equitable Liens on The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004's interest in the Parties Being Charged.

 

The Court further orders that in the event any distribution is to be made by the Parties Being Charged to The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004, as the result of The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004 `s membership interest in the Parties Being Charged, that said distribution be made to Wayfarer, as Wayfarer has been granted a Charging Order against The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004's membership interests in the Parties Being Charged.

 

IT IS, THEREFORE, ORDERED, ADJUDGED AND DECREED that The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004's membership interest in the Parties Being Charged is charged with Wayfarer's Judgment in the amount of $608,619.55, and that in the event any distribution is made by Parties Being Charged to The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004, that said distribution be made to Wayfarer subject Wayfarer's Charging Order, and that the Parties Being Charged are hereby restrained from making any distributions of any kind whatsoever to The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004, until such a time as Wayfarer's Judgment, together with interest and costs, has been paid and satisfied.

 

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004, is enjoined from receiving any distribution of any kind whatsoever from the Parties Being Charged until such a time as Wayfarer's Judgment, together with interest and costs, has been paid, and that any further distribution to be made by the Parties Being Charged, which would otherwise belong to The Halsey McLean Minor Revocable Trust U/A/D 11/2/2004, that said distribution be made to Wayfarer until such a time as Wayfarer's Judgment, together with interest and costs, has been paid and satisfied.

 

IT IS SO ORDERED.

 

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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

WEBSITE CONTENTS

 

General Information

 

Analysis of Uniform Limited Liability Company Act Sections re Charging Orders

  • Charging Orders (Section 503) contains the general charging order provisions.
  • Transfers of Transferable Interests (Section 502) includes definitions of "transfer" (102(23)), "transferable interests" (102(24)), and "transferees" (102(25)) defines to what the charging order attaches.
  • Definition of Distribution (Section 102(4)) specifies the economic right obtained through a charging order lien and/or foreclosure.

 

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

 

Charging Order Example Sample Form

 

TOPICAL RESEARCH

 

 

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

 

= = = = =

 

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

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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.