Adkisson's
CHARGING ORDERS
The Creditor's Remedy Against A Debtor's Interest In An LLC Or Partnership
Rhode Island Charging Order
GENERAL PARTNERSHIPS
R.I. Gen.Laws § 7-12-39. Partner's interest subject to charging order
(a) On due application to the superior court by any judgment creditor of a partner, the court may charge the interest of the debtor partner with payment of the unsatisfied amount of the judgment debt with interest on it; and may then or later appoint a receiver of his or her share of the profits, and of any other money due, or to fall due, to him or her in respect of the partnership, and make all other orders, directions, accounts, and inquiries that the debtor partner might have made, or that the circumstances of the case require.
(b) The interest charged may be redeemed at any time before foreclosure, or in case of a sale being directed by the court, may be purchased without causing a dissolution:
(1) With separate property, by any one or more of the partners; or
(2) With partnership property, by any one or more of the partners with the consent of all the partners whose interests are not so charged or sold.
(c) Nothing in §§ 7-12-12 -- 7-12-55 deprives a partner of his or her right, if any, under the exemption laws, regarding his interest in the partnership.
LIMITED PARTNERSHIPS
R.I. Gen.Laws § 7-13-41. Rights of creditor
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 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 or her partnership interest.
LIMITED LIABILITY COMPANIES
R.I. Gen.Laws § 7-16-37. Rights of judgment creditor
On application to a court of competent jurisdiction by any judgment creditor of a member, the court may charge the membership interest of the member with payment of the unsatisfied amount of judgment with interest. To the extent charged, the judgment creditor has only the rights of an assignee of the membership interest. This chapter does not deprive any member of the benefit of any exemption laws applicable to that member's membership interest.
RECENT ARTICLES
by Jay Adkisson
2021.06.17 ... Delaware Chancery Court Navigates Around Charging Order Exclusivity And Recognizes Reverse Veil-Piercing
2021.03.30 ... Some Random Musings About Single-Member LLCs Versus Multiple-Member LLCs
2021.03.27 ... Collateral Attack On Charging Order Via Federal Court Fails In Kerr
2021.02.21 ... Creditor’s Early Motion For A Receiver Gets The Kabosh In Medipro Case
2021.02.15 ... Debtor’s Large LLC Distribution To Circumvent Charging Order Draws Ire Of Non-Debtor Member In Bargreen
2021.01.19 ... Equitable Remedy To Circumvent Charging Order Exclusivity Denied In Ramos
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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
- About Jay Adkisson and this website
- Articles About Charging Orders
Analysis of Uniform Limited Liability Company Act Sections re Charging Orders
- Charging Orders (Section 503) contains the general charging order provisions.
- Foreclosure of Charging Order Liens (503(c-e)) deals with foreclosure generally of an interest subject to a charging order lien.
- Foreclosure re Single-Member LLC (503(f)) is the special case of foreclosure of an LLC with only one member.
- 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):
- Uniform Limited Liability Company Act, Article V ("ULLCA" and "RULLCA").
- Uniform Partnership Act, Article V - ("UPA" and "RUPA")
- Uniform Limited Partnership Act, Article VII - ("ULPA" and "RULPA")
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
NATURE OF REMEDY
Distributions/Economic Rights - Creditors rights to distributional interests/economic rights
PREJUDGMENT
Prejudgment Relief - Freezing the interest and distributions pending judgment
MOTION MECHANICS
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
INTERSTATE
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 RESTRICTIONS
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
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
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
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
SUNDRY OTHER
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
- 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.
- Anti-SLAPP Laws - A collection of and commentary about Anti-SLAPP laws and significant court decisions on the subject within the United States, and special focus on the California Anti-SLAPP law.
- Captive Insurance - Licensed insurance companies formed by the parent organization to handle the insurance and risk management needs of the business.
Contact Jay Adkisson:
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Phone: 702-953-9617 E:Mail: jay [at] jayad.com
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Jay is a Managing Partner of Adkisson Pitet LLP.
© 2021 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.