The Creditor's Remedy Against A Debtor's Interest In An LLC Or Partnership
Dream Games v. PC Onsite LLC, 2016 WL 1554978 (April 18, 2016).
United States District Court, D. Arizona.
Dream Games of Arizona Incorporated, et al., Plaintiffs,
PC Onsite LLC, et al., Defendants.
United States District Judge
*1 Before the Court is Plaintiff Dream Games of Arizona, Inc.'s ("Judgment Creditor") Application for Charging Order and United States Magistrate Eileen S. Willett's Report and Recommendation ("R&R"). (Docs. 522, 541.) The R&R recommends that the Court grant the Application and issue a charging order in the form proposed by Judgment Creditor. (Doc. 541 at 8.) Magistrate Judge Willett advised the parties that they had fourteen days to file objections to the R&R and that failure to file timely objections could be considered a waiver of the right to obtain review of the R&R. (Id. at 8-9 (citing Fed. R. Civ. P. 72; United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003)). No party filed objections, thus relieving the Court of its obligation to review the R&R. See Reyna-Tapia, 328 F.3d at 1121; Thomas v. Arn, 474 U.S. 140, 149 (1985) ("[Section 636(b)(1) ] does not...require any review at all...of any issue that is not the subject of an objection."); Fed. R. Civ. P. 72(b)(3) ( "The district judge must determine de novo any part of the magistrate judge's disposition that has been properly objected to."). The Court nonetheless has reviewed the R&R and finds that it is well-taken. The Court will accept the R&R, grant Judgment Creditor's Application, and issue the charging order in the form proposed by the Judgment Creditor. See 28 U.S.C. sec. 636(b)(1) (stating that the district court "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate"); Fed. R. Civ. P. 72(b)(3) ("The district judge may accept, reject, or modify the recommended disposition; receive further evidence; or return the matter to the magistrate judge with instructions.").
IT IS ORDERED that Magistrate Judge Willett's R&R, (Doc. 541), is ACCEPTED.
IT IS FURTHER ORDERED that Judgment Creditor's Application for Charging Order, (Doc. 522), is GRANTED.
IT IS FUTHER ORDERED that a charging order against the interest or interests of Judgment Debtor, Casey Hagon, in C&D Consulting LLC, a Texas limited liability company, is GRANTED and such interest or interests shall be charged with payment of the unsatisfied amount of the Judgment debt owing to Judgment Creditor, with interest thereon until paid.
IT IS FURTHER ORDERED that C&D Consulting, LLC shall provide Judgment Creditor with quarterly financial statements and an accounting of all disbursements to Judgment Debtor, or for the benefit of Judgment Debtor, within 21 days after the conclusion of each calendar quarter, from the date of this Order until the Judgment is fully satisfied. Such documents shall be mailed to Windtberg & Zdancewicz, PLC, 7551 S. Willow Dr., Suite 102, Tempe, Arizona 85283, or such other address as provided by Judgment Creditor.
Dated this 18th day of April, 2016.
Douglas L. Rayes
United States District Judge
by Jay Adkisson
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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
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
NATURE OF REMEDY
Distributions/Economic Rights - Creditors rights to distributional interests/economic rights
Prejudgment Relief - Freezing the interest and distributions pending judgment
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
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 EFFECT AND PRIORITY
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 LLC
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 AND REDEMPTION RIGHTS
Repurchase/Redemption Rights - Third-parties' ability to purchase the charged interest
Appeal - Issues relating to the appeal of a charging order
RELATION TO OTHER REMEDIES
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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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
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