Judgment creditors lost a battle today. The Pennsylvania Superior Court held that a judgment creditor may not receive a debtors interest’s in a Limited Liability Company, unless the LLC’s operating agreement allows it. A judgment creditor is a person who won a court order declaring that the defendant owes that person a certain sum of money. A person’s interest in an LLC is called a membership interest. The law treats membership interests as personal property that encompasses two rights—the right to manage the company and the right to receive a portion of the profit. A judgment creditor is only entitled to money to satisfy a judgment. If the law permitted a judgment creditor to receive a debtor’s interests, the creditor would receive more than just money; it would receive the right to manage and govern the company. Thus, under the Pennsylvania Limited Liability Company Law, a judgment creditor is allowed to attach any future profits the debtor may earn, but that is all. Zokaites v. Pittsburg Irish Pubs, 2008 Pa Super 281 (2008).
So, if someone owes you or your company, what does this case mean to you? First, you need a copy of the company’s Operating Agreement. Operating Agreements are contracts between the members of an LLC. You can acquire a member’s interests, if the contract allows a member to involuntarily transfer his/her interest to you. If the company filed it with the Pennsylvania Department of State, you can purchase a copy and download it directly from the Department’s website. Or you can Request the Production of Documents through discovery. Read the Operating Agreement to determine the procedure for transferring membership interests. If you do not understand the Operating Agreement, contact your attorney for a translation.
If the Operating Agreement does not permit a member to involuntarily transfer his/her interests, then you can attach the member’s portion of the profit. The procedures for attaching profits are similar to attaching a debtor’s bank account. Once the company is attached, they are under court order to send the member’s profit to share to you.
Though the law limited your ability to acquire a member’s interest in a company, you have many other methods to collect your judgment. We offer free consultations regarding this and others legal issues. Call today or chat online, privately, with an attorney every Monday through Friday from 8 a.m. to 8 p.m. at www.mckeeoffice.com
1-877-273-0749 (toll-free)
Skype Us! (mckee.law.offices)
http://www.mckeeoffice.com
Pingback: Pennsylvania Mesothelioma Lawyer, PA , asbestos exposure, PA Legal advisors