Posted by Bill K. (AZ) on March 31, 1999 at 23:33:02:
Rob,
Bill Bronchick says, “If the member whose interest is charged decides to stop distributing income to himself to avoid the creditor, a court would probably consider this act to be a fraudulent transfer. A possible solution would be for the member to sell a small interest to another member who is unrelated to himself. This ‘remaining member’ could then vote to stop the distributions. If the sale of the interest was for fair value, then there would arguably not be a fraudulent transfer. If the LLC operating agreement required unanimous approval for distributions of profits, then there would technically be a ‘deadlock’”.
From “How to Form Your Own Limited Liability Company and Family Limited Partnerships”
Does anyone know, if a single member LLC still has the same protection as two or more members would in regards to charging orders? Just wondering because there would only be one member getting the distributions.
Also, in Florida, LLCs, by statute, can be perpetual like a corporation. Would that have any affect on a charging order? After all you could hold off distributing income indefinitely.
Posted by JHyre in Ohio on April 01, 1999 at 07:18:35:
Rob,
I’m no expert when it comes to charging orders BUT if the Member and Manager are one and the same, CREDITOR may seize BOTH interests. The limited interest usually is where the juice is, while the Manager interest CONTROLS the juice. To protect yourself, JUICE and CONTROL must be seperate.