Bill Text: FL S1152 | 2011 | Regular Session | Comm Sub
Bill Title: Limited Liability Companies
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2011-04-29 - Read 2nd time -SJ 600 [S1152 Detail]
Download: Florida-2011-S1152-Comm_Sub.html
Florida Senate - 2011 CS for SB 1152
By the Committee on Banking and Insurance; and Senator Simmons
597-04913-11 20111152c1
1 A bill to be entitled
2 An act relating to limited liability companies;
3 amending s. 608.433, F.S.; providing that a charging
4 order against a member’s limited liability company
5 interest is the sole and exclusive remedy available to
6 enforce a judgment creditor’s unsatisfied judgment
7 against a member or member’s assignee; providing an
8 exception for enforcing a judgment creditor’s
9 unsatisfied judgment against a judgment debtor or
10 assignee of the judgment debtor of a single-member
11 limited liability company under certain circumstances;
12 providing that, in the case of a multimember limited
13 liability company, certain remedies are unavailable to
14 a judgment creditor attempting to satisfy a judgment;
15 prohibiting a court from ordering such remedies;
16 providing for construction relating to secured
17 creditor rights, specified principles of law and
18 equity, and continuing enforcement jurisdiction of the
19 court; providing legislative intent; providing for
20 retroactive application; providing an effective date.
21
22 WHEREAS, on June 24, 2010, the Florida Supreme Court held
23 in Olmstead v. Federal Trade Commission (No. SC08-1009),
24 reported at 44 So.3d 76, 2010-1 Trade Cases P 77,079, 35 Fla. L.
25 Weekly S357, that a charging order is not the exclusive remedy
26 available to a creditor holding a judgment against the sole
27 member of a Florida single-member limited liability company
28 (LLC), and
29 WHEREAS, a charging order represents a lien entitling a
30 judgment creditor to receive distributions from the LLC or the
31 partnership that otherwise would be payable to the member or
32 partner who is the judgment debtor, and
33 WHEREAS, the dissenting members of the Court in Olmstead
34 expressed a concern that the majority’s holding is not limited
35 to a single-member LLC and a desire that the Legislature clarify
36 the law in this area, and
37 WHEREAS, the Legislature finds that the uncertainty of the
38 breadth of the Court’s holding in Olmstead may persuade
39 businesses and investors located in Florida to organize LLCs
40 under the law in other jurisdictions where a charging order is
41 the exclusive remedy available to a judgment creditor of a
42 member of a multimember LLC, and
43 WHEREAS, the Legislature further finds it necessary to
44 amend s. 608.433, Florida Statutes, to remediate the potential
45 effect of the holding in Olmstead and to clarify that the
46 current law does not extend to a member of a multimember LLC
47 organized under Florida law and to provide procedures for
48 application of the holding in Olmstead to a member of a single
49 member LLC organized under Florida law, NOW, THEREFORE,
50
51 Be It Enacted by the Legislature of the State of Florida:
52
53 Section 1. Section 608.433, Florida Statutes, is amended to
54 read:
55 608.433 Right of assignee to become member.—
56 (1) Unless otherwise provided in the articles of
57 organization or operating agreement, an assignee of a limited
58 liability company interest may become a member only if all
59 members other than the member assigning the interest consent.
60 (2) An assignee who has become a member has, to the extent
61 assigned, the rights and powers, and is subject to the
62 restrictions and liabilities, of the assigning member under the
63 articles of organization, the operating agreement, and this
64 chapter. An assignee who becomes a member also is liable for the
65 obligations of the assignee’s assignor to make and return
66 contributions as provided in s. 608.4211 and wrongful
67 distributions as provided in s. 608.428. However, the assignee
68 is not obligated for liabilities which are unknown to the
69 assignee at the time the assignee became a member and which
70 could not be ascertained from the articles of organization or
71 the operating agreement.
72 (3) If an assignee of a limited liability company interest
73 becomes a member, the assignor is not released from liability to
74 the limited liability company under s. ss. 608.4211, s.
75 608.4228, or s. and 608.426.
76 (4)(a) On application to a court of competent jurisdiction
77 by any judgment creditor of a member or a member’s assignee, the
78 court may enter a charging order against the limited liability
79 company interest of the judgment debtor or assignee rights for
80 charge the limited liability company membership interest of the
81 member with payment of the unsatisfied amount of the judgment
82 plus with interest.
83 (b) A charging order constitutes a lien on the judgment
84 debtor’s limited liability company interest or assignee rights.
85 Under a charging order To the extent so charged, the judgment
86 creditor has only the rights of an assignee of a limited
87 liability company interest to receive any distribution or
88 distributions to which the judgment debtor would otherwise have
89 been entitled from the limited liability company, to the extent
90 of the judgment, including such interest.
91 (c) This chapter does not deprive any member or member’s
92 assignee of the benefit of any exemption law laws applicable to
93 the member’s limited liability company interest or the
94 assignee’s rights to distributions from the limited liability
95 company.
96 (5) Except as provided in subsections (6) and (7), a
97 charging order is the sole and exclusive remedy by which a
98 judgment creditor of a member or member’s assignee may satisfy a
99 judgment from the judgment debtor’s interest in a limited
100 liability company or rights to distributions from the limited
101 liability company.
102 (6) In the case of a limited liability company having only
103 one member, if a judgment creditor of a member or member’s
104 assignee establishes to the satisfaction of a court of competent
105 jurisdiction that distributions under a charging order will not
106 satisfy the judgment within a reasonable time, a charging order
107 is not the sole and exclusive remedy by which the judgment
108 creditor may satisfy the judgment against a judgment debtor who
109 is the sole member of a limited liability company or the
110 assignee of the sole member, and upon such showing, the court
111 may order the sale of that interest in the limited liability
112 company pursuant to a foreclosure sale. A judgment creditor may
113 make a showing to the court that distributions under a charging
114 order will not satisfy the judgment within a reasonable time at
115 any time after the entry of the judgment and may do so at the
116 same time that the judgment creditor applies for the entry of a
117 charging order.
118 (7) In the case of a limited liability company having only
119 one member, if the court orders foreclosure sale of a judgment
120 debtor’s interest in the limited liability company or of a
121 charging order lien against the sole member of the limited
122 liability company pursuant to subsection (6):
123 (a) The purchaser at the court-ordered foreclosure sale
124 obtains the member’s entire limited liability company interest,
125 not merely the rights of an assignee;
126 (b) The purchaser at the sale becomes the member of the
127 limited liability company; and
128 (c) The person whose limited liability company interest is
129 sold pursuant to the foreclosure sale or is the subject of the
130 foreclosed charging order ceases to be a member of the limited
131 liability company.
132 (8) In the case of a limited liability company having more
133 than one member, the remedy of foreclosure on a judgment
134 debtor’s interest in such limited liability company or against
135 rights to distribution from such limited liability company is
136 not available to a judgment creditor attempting to satisfy the
137 judgment and may not be ordered by a court.
138 (9) This section does not limit:
139 (a) The rights of a creditor that has been granted a
140 consensual security interest in a limited liability company
141 interest to pursue the remedies available to such secured
142 creditor under other law applicable to secured creditors;
143 (b) The principles of law and equity which affect
144 fraudulent transfers;
145 (c) The availability of the equitable principles of alter
146 ego, equitable lien, or constructive trust, or other equitable
147 principles not inconsistent with this section; or
148 (d) The continuing jurisdiction of the court to enforce its
149 charging order in a manner consistent with this section.
150 Section 2. The amendment to s. 608.433, Florida Statutes,
151 made by this act is intended by the Legislature to be clarifying
152 and remedial in nature and shall apply retroactively.
153 Section 3. This act shall take effect upon becoming a law.
