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People's Law Guide

 

Multi-Member Florida LLC Owners Handed a Dose of Uncertainty

Stephen M. Feidelman, Esq.
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12/22/10

The Florida supreme court handed down a decision this summer which is being interpreted to indicate that members’ ownership interests in a multi-member Florida limited liability company (LLC) do not have the protection of being immune from levy by a debtor member’s judgment creditors. Prior to this ruling, it was widely believed that the currently applicable statute operated in such a way that such creditors could only obtain “charging orders” against a debtor’s membership interests. A charging order permits the judgment creditor to attach a debtor member’s stream of principal and income distributions from the LLC, but does not otherwise act to transfer either the debtor member’s ownership interest or voting rights. However, the supreme court has held that the statute did not state a charging order was the exclusive remedy available to those judgment creditors.

 

While it is likely the Florida legislature will address this issue, it is uncertain how and when it may be resolved. In the meanwhile, the court’s ruling represents the current state of Florida law on this issue and attachment or judicial transfer of debtor member ownership interests in Florida LLCs may be available for use by current judgment creditors.

 

Stephen M. Feidelman maintains a general civil law practice in Hollywood, Florida, with a core concentration on franchise and dealership representation and allied business law issues. He has attained a Martindale-Hubbell Peer Review rating of AV®, which depicts that a lawyer is recognized for the highest levels of skill and integrity; has served on the Executive Council of The Florida Bar Business Law Section; chaired The Florida Bar's Antitrust, Franchise and Trade Regulation Law Committee; been a faculty participant in numerous seminars related to franchise and business opportunity legal issues; contributed to Florida Bar committee consumer education pamphlets and seminar course materials; and has been a guest college lecturer on franchise law issues.

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