This article discusses the difference between the transfer of an LLC member's "ownership interest" in the LLC and the assignment or transfer of its interest in the profits, distributions and losses of the LLC. The article also discusses how state LLC statutes distinguish whether, and under what circumstances, a transfer of an LLC member's entire interest has occurred, and how bankruptcy courts treat attempted transfers or assignments of LLC interests. The article further discusses how careless drafting of a mortgagee's due-on-sale clause may not prevent the transfer by an LLC member of its rights in the entity's profits, distributions and losses.
This article contains a brief summary and analysis of state conversion and merger statutes, which permit transfers from existing legal entities, such as general and limited partnerships, to limited liability companies. The article also discusses the ramification of these statutes with respect to title insurance coverage and the payment of transfer taxes.
This article discusses the provisions of the Delaware Limited Liability Act that permit the establishment within a limited liability company ("LLC") of designated series of specified properties or operations with separate business purposes or investment objectives, such that the debts, liabilities and obligations relating to a particular series would be enforceable only against the assets of such series and not against the assets of the LLC generally or the assets of any other series. The article also discusses the possible uses and benefits of such series, as well as some of the unresolved issues raised by the creation of series within an LLC.
A discussion of the regulations issued by the Internal Revenue Service, effective July 1, 1997, which provide that any eligible business entity not required by IRS regulations to be treated as a corporation for federal tax purposes may elect to be treated as a partnership for tax purposes.
A discussion of title insurance issues in connection with the formation and use of a limited liability company to own title to real estate and obtain financing.
This article discusses the treatment of limited liability companies ("LLCs") under the Bankruptcy Code, including single-member LLCs, the effect of a filing by a member of an LLC, lender concerns in structuring LLC borrowing entities, authority to file on behalf of an LLC, the efficacy of LLCs as asset-protection vehicles, and the feasibility of a lender becoming an LLC member. The article also analyzes the applicable case law in these areas.
This article discusses and analyzes an Ohio bankruptcy court decision holding that 1) the debtor, an Ohio limited liability company, was eligible to be a debtor under the Bankruptcy Code but was not entitled to file a pro se bankruptcy petition, and 2) as a matter of first impression, the company's manager engaged in the unauthorized practice of law by filing the bankruptcy petition on behalf of the limited liability company.
This article describes and analyzes an unreported Connecticut decision, which held that under appropriate circumstances the court could "pierce the corporate veil" of a limited liability company and hold the individual members personally liable, and could permit attachment of the assets of the individual members during pending litigation against the limited liability company.
This article discusses a Colorado bankruptcy court decision, In re Ashley Albright, which held that the debtors' interest in and control of a limited liability company, of which the debtor was the sole member, passed to the trustee as a "substituted member" upon the debtor's bankruptcy and entitled the trustee to sell the LLC's real property and distribute the net proceeds to the bankruptcy estate. The article also discusses case and statutory law that affects the ability of a single-member LLC to continue in existence notwithstanding the bankruptcy or death of the sole member of an LLC, or the termination of the sole member's membership interest.
This article describes specific forms of title-insurance endorsements (including the "Fairway" endorsement, the non-imputation endorsement, and the additional-insured endorsement) available (in most jurisdictions) for use in real estate transactions involving limited liability companies. The article also discusses and analyzes recent case law with respect to title issues involving LLCs, as well as transfer-tax issues affecting these entities.
