77th OREGON LEGISLATIVE ASSEMBLY--2013 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 2175
House Bill 3090
Sponsored by Representatives BARTON, DAVIS
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Provides procedure by which judgment creditor may obtain
charging order against membership interest of limited liability
company member to satisfy judgment. Provides that court may order
foreclosure of membership interest that is subject to charging
order if judgment creditor shows that distribution under charging
order will not pay judgment in reasonable time. Specifies that
person subject to charging order may redeem membership interest
before foreclosure and that limited liability company or member,
transferable interest of which is not subject to charging order,
may pay full amount of judgment and succeed to rights of judgment
creditor, including rights under charging order.
A BILL FOR AN ACT
Relating to judgments applied to membership interests in limited
liability companies; amending ORS 63.001 and 63.259.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 63.001 is amended to read:
63.001. As used in this chapter:
(1) 'Anniversary' means { - that - } { + the + } day each
year { + that is + } exactly one or more years after:
(a) The date { - of filing by - } { + on which + } the
Secretary of State
{ - of - } { + files + } the articles of organization
{ - in the case of - } { + for + } a domestic limited
liability company.
(b) The date { - of filing by - } { + on which + } the
Secretary of State
{ - of an - } { + files a foreign limited liability
company's + } application for authority to transact business
{ - in the case of a foreign limited liability company - } .
(2) 'Articles of organization' means the document described in
ORS 63.047 { - for the purpose of forming - } { + that
forms + } a limited liability company, including articles of
organization as { - they - } { + the articles of
organization + } may be amended or restated, articles of
conversion and articles of merger.
(3) 'Bankruptcy' means:
(a) { + A member's + } assignment { - by a member - } for
the benefit of creditors;
(b) { + A member's + } commencement of a voluntary bankruptcy
case
{ - by a member - } ;
(c) Adjudication of a member as bankrupt or insolvent;
(d) { + A member's + } filing { - by a member of - } a
petition or answer
{ - seeking - } { + to seek + } for the member any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law
or rule;
(e) { + A member's + }filing { - by a member of - } an
answer or other pleading { - admitting or failing - } { + to
admit or fail + } to contest the material allegations of a
petition filed against the member in
{ - any proceeding of this nature - } { + a bankruptcy
proceeding + };
(f) Seeking, consenting to or acquiescing in the appointment of
a trustee, receiver or liquidator of the member or of all or any
substantial part of the member's properties;
(g) { + A + } commencement of an involuntary bankruptcy case
against a member that has not been dismissed on or before the
120th day after the commencement of the case;
(h) { + An + } appointment, without the member's consent, of a
trustee, receiver or liquidator either of the member or of all or
any substantial part of the member's properties that is not
vacated or stayed on or before the 90th day after { + the + }
appointment; or
(i) { + An + } appointment described in paragraph (h) of this
subsection that is not vacated on or before the 90th day after
{ - expiration of - } the stay { - under - } { + described
in + } paragraph (h) of this subsection { + expires + }.
(4) 'Contribution' means anything of value that a person
contributes to the limited liability company as a prerequisite
for or in connection with membership { + , + } including cash,
property or services rendered or a promissory note or other
binding obligation to contribute cash or property or to perform
services.
(5) 'Corporation' or 'domestic corporation' means a corporation
for profit { + that is + } incorporated under ORS chapter 60.
(6) 'Distribution' means a direct or indirect transfer of money
or other property, except of a limited liability company's own
interests, or { + a limited liability company's + } incurrence
of indebtedness { - by a limited liability company - } to or
for the benefit of the limited liability company's members in
respect of a member's interests { - . A distribution may be - }
{ + , whether + } in the form of a declaration or payment of
profits, a purchase, retirement or other acquisition of
interests, a distribution of indebtedness, or otherwise.
(7) 'Domestic nonprofit corporation' means a corporation not
for profit { + that is + } incorporated under ORS chapter 65.
(8) 'Domestic professional corporation' means a corporation
{ + that is + }organized under ORS chapter 58 for the purpose
of rendering professional services and for the purposes provided
under ORS chapter 58.
(9) 'Entity' { - includes - } { + means + } a domestic or
foreign limited liability company, corporation, professional
corporation, foreign corporation, domestic or foreign nonprofit
corporation, domestic or foreign cooperative corporation, profit
or nonprofit unincorporated association, business trust, domestic
or foreign general or limited partnership, two or more persons
{ - having - } { + that have + } a joint or common economic
interest, { - any - } { + a + } state, the United States, a
federally recognized Native American or American Indian tribal
government or { - any - } { + a + } foreign government.
(10) 'Foreign corporation' means a corporation for profit { +
that is + }incorporated under laws other than the laws of this
state.
(11) 'Foreign limited liability company' means an entity that
is an unincorporated association organized under laws other than
the laws of this state and that is organized under a statute
under which an association may be formed that affords to each of
the entity's members limited liability with respect to the
liabilities of the entity.
(12) 'Foreign limited partnership' means a limited partnership
formed under laws other than the laws of this state
{ - and having as partners - } { + that has + } one or more
general partners and one or more limited partners.
(13) 'Foreign nonprofit corporation' means a corporation not
for profit { + that is + } organized under laws other than the
laws of this state.
(14) 'Foreign professional corporation' means a professional
corporation { + that is + } organized under laws other than the
laws of this state.
(15) 'Incompetency' means the entry of a judgment by a court of
competent jurisdiction adjudicating the member incompetent to
manage the member's person or estate.
(16) 'Individual' means a natural person.
(17) 'Limited liability company' or 'domestic limited liability
company' means an entity that is an unincorporated association
{ - having - } { + that has + } one or more members
{ - that - } { + and + } is organized under this chapter.
(18) 'Limited partnership' or 'domestic limited partnership'
means a partnership formed by two or more persons under ORS
chapter 70 { - and having - } { + that has + } one or more
general partners and one or more limited partners.
(19) 'Manager' { - or 'managers' - } means a person { - or
persons - } , who { + does not + } need { - not - } { +
to + } be { - members - } { + a member + },
{ - designated by - } { + that + } the members of a
manager-managed limited liability company { + designate + } to
manage the limited liability company's business and affairs.
(20) 'Manager-managed limited liability company' means a
limited liability company that is designated as a manager-managed
limited liability company in the limited liability company's
articles of organization or { - whose - } { + the + }
articles of organization { + of which + } otherwise expressly
provide that { - the limited liability company will be managed
by - } a manager or managers { + will manage the limited
liability company + }.
(21) { + (a) + } 'Member' { - or 'members' - } means a
person { - or persons - } with both an ownership interest in a
limited liability company and all the rights and obligations of a
member specified under this chapter.
{ + (b) + } 'Member' does not include an assignee of an
ownership interest who has not also acquired the voting and other
rights appurtenant to membership.
(22) 'Member-managed limited liability company' means a limited
liability company other than a manager-managed limited liability
company.
(23) 'Membership interest' { - or 'interest' - } means a
member's collective rights in a limited liability company,
including the member's share of profits and losses of the limited
liability company, the right to receive distributions of the
limited liability company's assets and any right to vote or
participate in management.
(24) 'Office,' when used to refer to the administrative unit
directed by the Secretary of State, means the office of the
Secretary of State.
(25) 'Operating agreement' means { - any - } { + a + }
valid agreement, written or oral, of the member or members as to
the affairs of a limited liability company and the conduct of the
limited liability company's business.
(26) 'Organizer' means one of the signers of the initial
articles of organization.
{ - (27) 'Party' includes an individual who was, is or is
threatened to be made a named defendant or respondent in a
proceeding. - }
{ - (28) - } { + (27) + } 'Person' means an individual or
entity.
{ - (29) - } { + (28) + } 'Proceeding' means any
threatened, pending or completed action, suit or proceeding
whether civil, criminal, administrative or investigatory and
whether formal or informal.
{ - (30) - } { + (29) + } 'State,' when referring to a part
of the United States, { - includes - } { + means + } a state,
commonwealth, territory or insular possession of the United
States and the agencies and governmental subdivisions of the
state, commonwealth, territory or insular possession.
{ + (30) 'Transferable interest' means a right, originally
associated with a person's capacity as a member, to receive
distributions from a limited liability company in accordance with
the operating agreement, whether or not the person remains a
member or continues to own any part of the right. + }
(31) 'United States' includes a district, authority, bureau,
commission, department or any other agency of the United States.
SECTION 2. ORS 63.259 is amended to read:
63.259. { - 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 the judgment with interest. To the extent
so charged, the judgment creditor has only the rights of an
assignee of the membership interest. This chapter shall not
deprive any member of the benefit of any exemption laws
applicable to the member's membership interest. - }
{ + (1) After a judgment creditor of a member or transferee
makes an application, a court may enter a charging order against
the transferable interest of a judgment debtor for the
unsatisfied amount of a judgment. A charging order constitutes a
lien on the judgment debtor's transferable interest and requires
a limited liability company to pay to the person on behalf of
which the court issued the charging order any distribution that
the limited liability company would otherwise pay to the judgment
debtor.
(2) To the extent necessary to enable a person on behalf of
which a court has issued a charging order under subsection (1) of
this section to collect a distribution, the court may:
(a) Appoint a receiver for the distribution that is subject to
the charging order and give the receiver the power to make all
inquiries the judgment debtor might make; and
(b) Make any other order the court deems necessary to give
effect to the charging order.
(3) If a judgment creditor shows that distributions under a
charging order will not pay a judgment debt within a reasonable
time, a court may foreclose the lien and order the sale of the
transferable interest. A purchaser at the foreclosure sale
obtains only the transferable interest, does not as a result of
the purchase become a member of the limited liability company and
is subject to ORS 63.249.
(4) At any time before a foreclosure under subsection (3) of
this section, the member or transferee whose transferable
interest is subject to a charging order under subsection (1) of
this section may extinguish the charging order by satisfying the
judgment and filing a certified copy of the satisfaction with the
court that issued the charging order.
(5) At any time before a foreclosure under subsection (3) of
this section, a limited liability company or a member of the
limited liability company, the transferable interest of which is
not subject to the charging order, may pay to the judgment
creditor the full amount due under the judgment and with the
payment succeed to the judgment creditor's rights, including
rights under the charging order.
(6) This section does not deprive a member or transferee of the
benefit of an exemption law that applies to the member's or
transferee's transferable interest.
(7) This section is the exclusive remedy by which a person may,
in the capacity of a judgment creditor, satisfy a judgment
against a member or transferee from the judgment debtor's
transferable interest. + }
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