Practice Guide Charging Order

Adkisson's CHARGING ORDERS The Creditors' Primary Remedy Against A Debtor's Interest In A Limited Liability Company Or Partnership

Caution state law variances! Check currency of statutes!

 

Charging Order Statutes Of The United States

 

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

The Charging Orders Practice Guide: Understanding Judgment Creditor Rights Against LLC Members, by Jay D. Adkisson (ABA, 2018). Available for purchase from the American Bar Association at https://goo.gl/faZzY6 or from Amazon at https://www.amazon.com/Charging-Orders-Practice-Guide-Understanding/dp/1641052643/

 

Table of Contents

Introduction

Chapter 1

  • Introduction

Chapter 2

  • History of the “Peculiar Mechanism”
  • Judgments Act of 1838
  • Partnership Act of 1890 c. 39 (Regnal. 53 & 54 Victoria)
  • Uniform Partnership Act of 1914
  • Tropical Interlude
  • Kaiser William Invades Wyoming

Chapter 3

  • Nature of the Charging Order
  • The Effect of the Charging Order
  • Case Study: Inman
  • Case Study: Weddell

Chapter 4

  • Using the Charging Order
  • Case Study: Detroit Memorial Partners

Chapter 5

  • The Charging Order Procedure
  • Case Study: Textron Financial

Chapter 6

  • Parties to a Charging Order Proceeding

Chapter 7

  • Jurisdiction
  • Jurisdiction Over the Debtor
  • Jurisdiction Over the Nondebtor Members
  • Jurisdiction Over the LLC
  • Case Study: Wells Fargo
  • Case Study: Blaker Enterprises LLC.
  • Case Study: Mahalo Investments
  • Case Study: Rockstone Capital
  • Case Study: Shanghai Real Estate
  • Case Study: Spates

Chapter 8

  • Discovery
  • Nonjudicial Discovery
  • Written Discovery
  • Debtor Examination
  • Third-Party Examination of the LLC or Other Members

Chapter 9

  • The Motion for Charging Order
  • Essentials of the Motion
  • Ex Parte Motions
  • Factual Elements of the Motion
  • Legal Elements of the Motion
  • Accompanying Declaration
  • Accompanying Brief
  • Ancillary Provisions
  • Case Study: Law

Chapter 10

  • Notice of the Motion
  • Service vs. Simple Notice
  • How Notice Is Given to the LLC
  • Proof of Notice

Chapter 11

  • Drafting the Proposed Charging Order
  • Essential Provisions
  • Ancillary Provisions
  • Prohibiting or Imputing Loans and Other Compensation
  • Requiring Information from the LLC
  • Unequal Distributions

Chapter 12

  • Defenses to the Charging Order
  • The LLC’s Defenses
  • The Debtor’s Defenses
  • Effect of State Statutory Creditor Exemptions
  • Effect of Federal Wage Garnishment Restrictions
  • Case Study: Alexander

Chapter 13

  • The Hearing and Notice of the Charging Order
  • The Hearing on the Charging Order Motion
  • Giving Notice of the Issued Charging Order

Chapter 14

  • enforcing the Charging Order
  • Enforcing against the Debtor
  • Enforcing against the LLC
  • Case Study: Joshlin Bros.
  • Case Study: McClure

Chapter 15

  • Complying with the Charging Order
  • Compliance by the Entity
  • Compliance by the Debtor
  • Case Study: Buckeye Retirement
  • Case Study: Seven Arts Pictures

Chapter 16

  • Receivers to enforce the Charging Order
  • Authority for the Receiver
  • Powers of the Receiver
  • The Receiver as Trojan Horse
  • Justifying the Receiver
  • Appointment of the Receiver
  • Powers of the Receiver
  • Case Study: Pajooh

Chapter 17

  • Preforeclosure Redemption
  • Statutory Authority
  • Operating Agreement Provision

Chapter 18

  • Foreclosure & Redemption
  • Statutory Authority
  • The Monster Under The Bed?

Chapter 19

  • Appealing A Charging Order
  • Statutory Authority
  • Standing to Appeal
  • Time to Appeal

Chapter 20

  • Conflict-of-Laws Issues
  • Choice-of-Law Provisions and Internal Affairs
  • Case Study: Earthgrains

Chapter 21

  • The Foreign LLC Issue
  • Case Study: German American Capital
  • Case Study: Arayos
  • Case Study: Vision Marketing

Chapter 22

  • The Single-Member Entity
  • State Law and the Olmstead Patch
  • Statutory Problems with Foreclosure of the Charging Order Lien
  • Late-Arriving Members
  • D. When Is a Peppercorn Not a Peppercorn?
  • Case Study: Heckert

Chapter 23

  • Intra-Member Disputes
  • Lack of Nondebtor Member
  • The Issue May Be Drafted Around
  • Case Study: Gillet
  • Case Study: Voll
  • Case Study: Young

Chapter 24

  • Circumventing Charging Order Exclusivity
  • Case Study: Devoll
  • Case Study: Wilhite

Chapter 25

  • Other Creditor Remedies
  • Reverse Veil Piercing
  • Distribution Clawbacks
  • Voidable Transactions

Chapter 26

  • Bankruptcy Issues with Charging Orders
  • The Debtor’s Interest as to Secured Creditors
  • The Debtor’s Interest as to Unsecured Creditors
  • If the Interest Is Executory
  • If the Interest Is Nonexecutory
  • Ipso Facto Clauses
  • Case Study: Cleveland
  • Case Study: Denman

Chapter 27

  • Tax Issues
  • Preforeclosure
  • Post-Foreclosure

Appendices

  • Appendix A: Additional Resources
  • Appendix B: Model Charging Order Documents / Charging Order Example (Motion, Notice of Hearing, Memo, Order, Notice of Entry of Charging Order)
  • Appendix C: Carter Bishop Charts
  • Appendix D: Ehmann And Its Progeny

 

RECENT ARTICLES

by Jay Adkisson

 

2020.02.29 ... Florida Charging Order Requires Distributions To Be Re-Directed To The Creditor In Kostoglou

2019.06.24 ... Charging Order Protection Backfires At Judicial Sale In Preservation Holdings

2019.04.27 ... Iowa Supreme Court Serves Up A Shoddy Charging Order Opinion In Retterath

2019.03.19 ... Million Dollar Quartet Leads To Lien Priority Dispute Involving Charging Order

2019.02.18 ... Florida Order Awarding LLC Interest To Creditor Reversed In Pansky

 

More Articles On Charging Orders click here

 

THE CHARGING ORDER 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

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

 

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Additional Court Opinions About charging orders (unsorted)

 

OTHER INFORMATIONAL WEBSITES

by Jay Adkisson

 

  • Jay Adkisson - More about Jay D. Adkisson, background, books, articles, speaking appearances.

 

  • Creditor-Debtor Law - An overview of judgment enforcement tools and their uses by creditors, and possible defenses by debtors. Related topics include:

 

  • 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.

 

 

  • Captive Insurance - Licensed insurance companies formed by the parent organization to handle the insurance and risk management needs of the business.

 

Contact Jay Adkisson:

 

Phone: 702-953-9617     Fax: 877-698-0678     jay [at] jayad.com

 

Unless a dire emergency, please send me an e-mail first in lieu of calling to set up a telephone appointment for a date and time certain.

 

Las Vegas Office: 6671 S. Las Vegas Blvd., Suite 210, Las Vegas, NV 89119, Ph: 702-953-9617, Fax: 877-698-0678. By appointment only.

 

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Admitted to practice law in Arizona, California, Nevada, Oklahoma and Texas.

 

© 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.