The Creditor's Remedy Against A Debtor's Interest In An LLC Or Partnership


2013 - California - Safeco Insurance


Safeco Ins. Co. v. Raisch, Case No. C 11-05332 PSG (N.D.Cal., March 20, 2013).






RAISCH COMPANY, a California CORPORATION, and DOUGLAS RAISCH, an individual, Defendants.


Case No. C 11-05332 PSG.


United States District Court, N.D. California, San Jose Division.


March 20, 2013.




PAUL S. GREWAL, Magistrate Judge.


On November 27, 2012, the court granted the parties' stipulation for entry of judgment against Defendants Raisch Company and Douglas Raisch (collectively, "Defendants") in the amount of $298,329.81. On January 16, 2013, Plaintiff Safeco Insurance Company of America ("Safeco") moved for entry of a charging order against non-party partnership AG Raisch, B A Raisch, D E Raisch, D KL dba R&R Farms ("R&R Farms") located at 15581 Toyon Dr., Los Gatos, CA 95030. Third-party Raisch Investment Group, Ltd. ("RIG") filed a non-opposition but noted that it holds a senior judgment against Defendants and a charging order against R&R Farms. On March 5, 2013, Safeco and RIG appeared for hearing, but Defendants did not appear. Having considered the papers and arguments of counsel, the motion is GRANTED.


Taken together, California Code of Civil Procedure sec. 708.310-708.320 and Corporations Code sec. 16504 allow the court to impose a charging order against the judgment debtor's transferable partnership interest to satisfy any outstanding judgment against the debtor partner.[1] Safeco has submitted declarations from a Santa Clara Superior Court proceeding of both Defendant Douglas Raisch and Bryan Raisch, partner in the general partnership of R&R Farms.[2] While these declarations establish that at least as of August 20, 2012, Douglas Raisch had a 25% partnership interest in R&R Farms, it is unclear as to whether said partnership interest was transferable and whether Douglas Raisch still holds the interest.[3] Without deciding this issue, the court finds it appropriate to impose a charging order on any partnership interest that remains.


Any partnership interest Defendant and judgment debtor Douglas Raisch holds in R&R Farms is hereby charged with the unpaid balance of the judgment entered against Douglas Raisch in favor of Safeco on November 27, 2012, in the sum of $298,329.81 plus interest at the rate of 0.17% per annum calculated from the date of the judgment.[4]


Within 90 days of this order, R&R Farms shall provide to Safeco a written accounting of its assets and liabilities, along with sufficient backup documentation, to allow Safeco a meaningful opportunity to evaluate the financial strength of the partnership.




[1] See U.S. Fid. & Guar. Co. v. The Scott Companies, Inc., Case No. 03-5376SBAEMC, 2008 WL 728874, at *1 (N.D. Cal. Mar. 17, 2008).


[2] See Docket No. 35.


[3] See id.


[4] It is well-established that even in diversity cases, post-judgment interest is determined according to federal law. See Northrop Corp. v. Triad Int'l Mktg., S.A., 842 F.2d 1154, 1155 (9th Cir. 1988). The postjudgment interest rate therefore is calculated in compliance with 28 U.S.C. sec. 1961 and the weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve system for the week of November 23, 2012, which is the week preceding the judgment.



by Jay Adkisson


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More Articles On Charging Orders click here



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:



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





     Distributions/Economic Rights - Creditors rights to distributional interests/economic rights


     Prejudgment Relief - Freezing the interest and distributions pending judgment


     Entities - The types of legal entities amenable to charging orders, or not

     Procedure - The procedure for obtaining a charging order and ancillary provisions

     Unknown Interest - Where the debtor's interest, if any, has not been ascertained

     Order Form Generally - Most issues to the form of the charging order

     Order Form Future Interests - How the charging order affects subsequently-acquired interests

     Exemptions - Available state and federal protections that may apply to charging orders


     Abstention - Collateral attacks on charging orders in federal court

     Conflicts-Of-Law - Determining which state's laws apply to a charging order dispute

     Jurisdiction - Issues relating to the court's authority over out-of-state debtors and LLCs

     Foreign Entities - Charging orders against out-of-state entities


     Creditor Rights Restrictions - Limitations on creditors' management and informational rights

     Information Rights - Creditors' ability to access information about the LLC

     Management & Voting Rights - Rights of creditor after charging order issued


     Lien - The lien effect of a charging order and priority issues


     Compliance - Issues for the LLC and non-debtor members in complying with a charging order

     Receiver - The role of the receiver in charging order proceedings


     Single-Member LLCs - Enforcing the judgment against an LLC with a sole member


     Foreclosure - Liquidation by judicial sale of the debtor's right to distributions


     Repurchase/Redemption Rights - Third-parties' ability to purchase the charged interest


     Appeal - Issues relating to the appeal of a charging order


     Exclusivity - The charging order as the sole remedy available to creditors and exceptions

     Voidable Transactions/Fraudulent Transfers - Issues relating to avoidable transfers of interests


     Abstention - Attempts to collaterally attack the charging order in federal court

     Bankruptcy - Treatment of the debtor/member's interest in bankruptcy

     Intra-Member Disputes - Where one member obtains a charging order against another

     Taxes - Tax issues relating to charging orders for all involved parties


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List Of Court Opinion Sections

Additional Court Opinions About charging orders (unsorted)




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


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  • Voidable Transactions - Discussion of the Uniform Voidable Transactions Act (a/k/a 2014 Revision of the Uniform Fraudulent Transfers Act) and fraudulent transfer law in general.


  • California Enforcement of Judgments Law - Considers the topic of judgment enforcement in California, including the California Enforcement of Judgments Law and other laws related to California creditor-debtor issues.


  • Private Retirement Plans - An exploration of a unique creditor exemption allowed under California law which can be very beneficial but is often misused.


  • Protected Series - An examination of the single most complex statutory legal structure yet created, with particular reference to the Uniform Protected Series Act of 2017.


  • Asset Protection - The all-time best-selling book on asset protection planning by Jay Adkisson and Chris Riser.



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