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275.260 Member's transferable interest subject to charging order.
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This section provides the exclusive remedy by which the judgment creditor of a
member or the assignee of a member may satisfy a judgment out of the judgment
debtor's limited liability company interest.
On application to a court of competent jurisdiction by a judgment creditor of a
member or a member's assignee, a court may charge the judgment debtor's interest
in the limited liability company with payment of the unsatisfied amount of the
judgment. To the extent so charged, the judgment creditor has only the rights of an
assignee and shall have no right to participate in the management or to cause the
dissolution of the limited liability company. The court may appoint a receiver of the
share of the distributions due or to become due to the judgment debtor in respect of
the limited liability company interest and make all other orders, directions,
accounts, and inquiries the judgment debtor might have made or which the
circumstances of the case may require to give effect to the charging order.
A charging order constitutes a lien on and the right to receive distributions made
with respect to the judgment debtor's limited liability company interest. A charging
order does not of itself constitute an assignment of the limited liability company
interest.
The court may order a foreclosure upon the limited liability company interest
subject to the charging order at any time. The purchaser of the limited liability
company interest at the foreclosure sale has the rights of an assignee. At any time
before foreclosure, the charged limited liability company interest may be redeemed:
(a) By the judgment debtor;
(b) With property other than limited liability company property, by one (1) or
more of the other members; and
(c) With limited liability company property, by the limited liability company with
the consent of all members whose interest are not so charged.
This section does not deprive a member or a member's assignee of the benefit of any
exemption laws applicable to the member's or assignee's limited liability company
interest.
The limited liability company is not a necessary party to an application for a
charging order. Service of the charging order on a limited liability company may be
made by the court granting the charging order or as the court should otherwise
direct.
Effective: June 8, 2011
History: Amended 2011 Ky. Acts ch. 29, sec. 23, effective June 8, 2011. -- Repealed
and reenacted 2010 Ky. Acts ch. 51, sec. 117, effective July 15, 2010; and amended
ch. 133, sec. 35, effective July 15, 2010. -- Amended 2007 Ky. Acts ch. 137, sec.
117, effective June 26, 2007. -- Amended 1998 Ky. Acts ch. 341, sec. 35, effective
July 15, 1998. -- Created 1994 Ky. Acts ch. 389, sec. 52, effective July 15, 1994.
Legislative Research Commission Note (7/15/2010). This section was amended by
2010 Ky. Acts ch. 133, and repealed and reenacted by 2010 Ky. Acts ch. 51.
Pursuant to Section 184 of Acts ch. 51, it was the intent of the General Assembly that
the repeal and reenactment not serve to void the amendment, and these Acts do not
appear to be in conflict; therefore, they have been codified together.
Legislative Research Commission Note (7/15/2010). 2010 Ky. Acts ch. 51, sec. 183,
provides, "The specific textual provisions of Sections 1 to 178 of this Act which
reflect amendments made to those sections by 2007 Ky. Acts ch. 137 shall be deemed
effective as of June 26, 2007, and those provisions are hereby made expressly
retroactive to that date, with the remainder of the text of those sections being
unaffected by the provisions of this section."
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