Bill Text: FL S1152 | 2011 | Regular Session | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
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-Introduced.html
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-Introduced.html
Florida Senate - 2011 SB 1152 By Senator Simmons 22-00610B-11 20111152__ 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 legislative intent; providing for 13 retroactive application; providing an effective date. 14 15 WHEREAS, on June 24, 2010, the Florida Supreme Court held 16 in Olmstead v. Federal Trade Commission (No. SC08-1009), 17 reported at 44 So.3d 76, 2010-1 Trade Cases P 77,079, 35 Fla. L. 18 Weekly S357, that a charging order is not the exclusive remedy 19 available to a creditor holding a judgment against the sole 20 member of a Florida single-member limited liability company 21 (LLC), and 22 WHEREAS, a charging order represents a lien entitling a 23 judgment creditor to receive distributions from the LLC or the 24 partnership that otherwise would be payable to the member or 25 partner who is the judgment debtor, and 26 WHEREAS, the dissenting members of the Court in Olmstead 27 expressed a concern that the majority’s holding is not limited 28 to a single-member LLC and a desire that the Legislature clarify 29 the law in this area, and 30 WHEREAS, the Legislature finds that the uncertainty of the 31 breadth of the Court’s holding in Olmstead may persuade 32 businesses and investors located in Florida to organize LLCs 33 under the law in other jurisdictions where a charging order is 34 the exclusive remedy available to a judgment creditor of a 35 member of a multimember LLC, and 36 WHEREAS, the Legislature further finds it necessary to 37 amend s. 608.433, Florida Statutes, to remediate the potential 38 effect of the holding in Olmstead and to clarify that the 39 current law does not extend to a member of a multimember LLC 40 organized under Florida law and to provide procedures for 41 application of the holding in Olmstead to a member of a single 42 member LLC organized under Florida law, NOW, THEREFORE, 43 44 Be It Enacted by the Legislature of the State of Florida: 45 46 Section 1. Section 608.433, Florida Statutes, is amended to 47 read: 48 608.433 Right of assignee to become member.— 49 (1) Unless otherwise provided in the articles of 50 organization or operating agreement, an assignee of a limited 51 liability company interest may become a member only if all 52 members other than the member assigning the interest consent. 53 (2) An assignee who has become a member has, to the extent 54 assigned, the rights and powers, and is subject to the 55 restrictions and liabilities, of the assigning member under the 56 articles of organization, the operating agreement, and this 57 chapter. An assignee who becomes a member also is liable for the 58 obligations of the assignee’s assignor to make and return 59 contributions as provided in s. 608.4211 and wrongful 60 distributions as provided in s. 608.428. However, the assignee 61 is not obligated for liabilities which are unknown to the 62 assignee at the time the assignee became a member and which 63 could not be ascertained from the articles of organization or 64 the operating agreement. 65 (3) If an assignee of a limited liability company interest 66 becomes a member, the assignor is not released from liability to 67 the limited liability company under s.ss.608.4211, s. 68 608.4228, or s.and608.426. 69 (4)(a) On application to a court of competent jurisdiction 70 by any judgment creditor of a member or a member’s assignee, the 71 court may enter a charging order against the limited liability 72 company interest of the judgment debtor or assignee rights for 73charge the limited liability company membership interest of the74member with payment ofthe unsatisfied amount of the judgment 75 pluswithinterest. 76 (b) A charging order constitutes a lien on the judgment 77 debtor’s limited liability company interest or assignee rights. 78 Under a charging orderTo the extent so charged, the judgment 79 creditor has only the rights of an assignee of a limited 80 liability company interest to receive any distribution or 81 distributions to which the judgment debtor would otherwise have 82 been entitled from the limited liability company, to the extent 83 of the judgment, includingsuchinterest. 84 (c) This chapter does not deprive any member or member’s 85 assignee of the benefit of any exemption lawlawsapplicable to 86 the member’s limited liability company interest or the 87 assignee’s rights to distributions from the limited liability 88 company. 89 (5) Except as provided in subsections (6) and (7), a 90 charging order is the sole and exclusive remedy by which a 91 judgment creditor of a member or member’s assignee may satisfy a 92 judgment from the judgment debtor’s interest in a limited 93 liability company or rights to distributions from the limited 94 liability company. 95 (6) In the case of a limited liability company having only 96 one member, if a judgment creditor of a member or member’s 97 assignee establishes to the satisfaction of a court of competent 98 jurisdiction that distributions under a charging order will not 99 satisfy the judgment within a reasonable time, a charging order 100 is not the sole and exclusive remedy by which the judgment 101 creditor may satisfy the judgment against a judgment debtor who 102 is the sole member of a limited liability company or the 103 assignee of the sole member, and upon such showing, the court 104 may order the sale of that interest in the limited liability 105 company pursuant to a foreclosure sale. A judgment creditor may 106 make a showing to the court that distributions under a charging 107 order will not satisfy the judgment within a reasonable time at 108 any time after the entry of the judgment and may do so at the 109 same time that the judgment creditor applies for the entry of a 110 charging order. 111 (7) In the case of a limited liability company having only 112 one member, if the court orders foreclosure sale of a judgment 113 debtor’s interest in the limited liability company or of a 114 charging order lien against the sole member of the limited 115 liability company pursuant to subsection (6): 116 (a) The purchaser at the court-ordered foreclosure sale 117 obtains the member’s entire limited liability company interest, 118 not merely the member’s transferable interest; 119 (b) The purchaser at the sale becomes the member of the 120 limited liability company; and 121 (c) The person whose limited liability company interest is 122 sold pursuant to the foreclosure sale or is the subject of the 123 foreclosed charging order ceases to be a member of the limited 124 liability company. 125 Section 2. The amendment to s. 608.433, Florida Statutes, 126 made by this act is intended by the Legislature to be clarifying 127 and remedial in nature and shall apply retroactively. 128 Section 3. This act shall take effect upon becoming a law.