CS/HB 253

1	A bill to be entitled
2	An act relating to limited liability companies; amending
3	s. 608.433, F.S.; providing that a charging order against
4	a member's limited liability company interest is the sole
5	and exclusive remedy available to enforce a judgment
6	creditor's unsatisfied judgment against a member or
7	member's assignee; providing an exception for enforcing a
8	judgment creditor's unsatisfied judgment against a
9	judgment debtor or assignee of the judgment debtor of a
10	single-member limited liability company under certain
11	circumstances; providing legislative intent; providing for
12	retroactive application; providing an effective date.
13
14	WHEREAS, on June 24, 2010, the Florida Supreme Court held
15	in Olmstead v. Federal Trade Commission (No. SC08-1009),
16	reported at 44 So.3d 76, 2010-1 Trade Cases P 77,079, 35 Fla. L.
17	Weekly S357, that a charging order is not the exclusive remedy
18	available to a creditor holding a judgment against the sole
19	member of a Florida single-member limited liability company
20	(LLC), and
21	WHEREAS, a charging order represents a lien entitling a
22	judgment creditor to receive distributions from the LLC or the
23	partnership that otherwise would be payable to the member or
24	partner who is the judgment debtor, and
25	WHEREAS, the dissenting members of the Court in Olmstead
26	expressed a concern that the majority's holding is not limited
27	to a single-member LLC and a desire that the Legislature clarify
28	the law in this area, and
29	WHEREAS, the Legislature finds that the uncertainty of the
30	breadth of the Court's holding in Olmstead may persuade
31	businesses and investors located in Florida to organize LLCs
32	under the law in other jurisdictions where a charging order is
33	the exclusive remedy available to a judgment creditor of a
34	member of a multimember LLC, and
35	WHEREAS, the Legislature further finds it necessary to
36	amend s. 608.433, Florida Statutes, to remediate the potential
37	effect of the holding in Olmstead and to clarify that the
38	current law does not extend to a member of a multimember LLC
39	organized under Florida law and to provide procedures for
40	application of the holding in Olmstead to a member of a single-
41	member LLC organized under Florida law, NOW, THEREFORE,
42
43	Be It Enacted by the Legislature of the State of Florida:
44
45	Section 1.  Section 608.433, Florida Statutes, is amended
46	to read:
47	608.433  Right of assignee to become member.-
48	(1)  Unless otherwise provided in the articles of
49	organization or operating agreement, an assignee of a limited
50	liability company interest may become a member only if all
51	members other than the member assigning the interest consent.
52	(2)  An assignee who has become a member has, to the extent
53	assigned, the rights and powers, and is subject to the
54	restrictions and liabilities, of the assigning member under the
55	articles of organization, the operating agreement, and this
56	chapter. An assignee who becomes a member also is liable for the
57	obligations of the assignee's assignor to make and return
58	contributions as provided in s. 608.4211 and wrongful
59	distributions as provided in s. 608.428. However, the assignee
60	is not obligated for liabilities which are unknown to the
61	assignee at the time the assignee became a member and which
62	could not be ascertained from the articles of organization or
63	the operating agreement.
64	(3)  If an assignee of a limited liability company interest
65	becomes a member, the assignor is not released from liability to
66	the limited liability company under s. ss. 608.4211, s.
67	608.4228, or s. and 608.426.
68	(4)(a)  On application to a court of competent jurisdiction
69	by any judgment creditor of a member or a member's assignee, the
70	court may enter a charging order against the limited liability
71	company interest of the judgment debtor or assignee rights for
72	charge the limited liability company membership interest of the
73	member with payment of the unsatisfied amount of the judgment
74	plus with interest.
75	(b)  A charging order constitutes a lien on the judgment
76	debtor's limited liability company interest or assignee rights.
77	Under a charging order To the extent so charged, the judgment
78	creditor has only the rights of an assignee of a limited
79	liability company interest to receive any distribution or
80	distributions to which the judgment debtor would otherwise have
81	been entitled from the limited liability company, to the extent
82	of the judgment, including such interest.
83	(c)  This chapter does not deprive any member or member's
84	assignee of the benefit of any exemption law laws applicable to
85	the member's limited liability company interest or the
86	assignee's rights to distributions from the limited liability
87	company.
88	(5)  Except as provided in subsections (6) and (7), a
89	charging order is the sole and exclusive remedy by which a
90	judgment creditor of a member or member's assignee may satisfy a
91	judgment from the judgment debtor's interest in a limited
92	liability company or rights to distributions from the limited
93	liability company.
94	(6)  In the case of a limited liability company having only
95	one member, if a judgment creditor of a member or member's
96	assignee establishes to the satisfaction of a court of competent
97	jurisdiction that distributions under a charging order will not
98	satisfy the judgment within a reasonable time, a charging order
99	is not the sole and exclusive remedy by which the judgment
100	creditor may satisfy the judgment against a judgment debtor who
101	is the sole member of a limited liability company or the
102	assignee of the sole member, and upon such showing, the court
103	may order the sale of that interest in the limited liability
104	company pursuant to a foreclosure sale. A judgment creditor may
105	make a showing to the court that distributions under a charging
106	order will not satisfy the judgment within a reasonable time at
107	any time after the entry of the judgment and may do so at the
108	same time that the judgment creditor applies for the entry of a
109	charging order.
110	(7)  In the case of a limited liability company having only
111	one member, if the court orders foreclosure sale of a judgment
112	debtor's interest in the limited liability company or of a
113	charging order lien against the sole member of the limited
114	liability company pursuant to subsection (6):
115	(a)  The purchaser at the court-ordered foreclosure sale
116	obtains the member's entire limited liability company interest,
117	not merely the member's transferable interest;
118	(b)  The purchaser at the sale becomes the member of the
119	limited liability company; and
120	(c)  The person whose limited liability company interest is
121	sold pursuant to the foreclosure sale or is the subject of the
122	foreclosed charging order ceases to be a member of the limited
123	liability company.
124	Section 2.  The amendment to s. 608.433, Florida Statutes,
125	made by this act is intended by the Legislature to be clarifying
126	and remedial in nature and shall apply retroactively.
127	Section 3.  This act shall take effect upon becoming a law.

CODING: Words stricken are deletions; words underlined are additions.