1. I. On application to a court of competent jurisdiction by any judgment creditor of (a) a member of a limited liability company (the "debtor-member") or (b) a transferee of all or any part of a member's limited liability company interest (a "transferee"), the court may enter a charging order against the limited liability company in respect of the limited liability company interest of the debtor-member or the transferee for the unsatisfied amount of the judgment plus interest.

2. II.

   1. (a) A charging order constitutes a lien on a debtor-member's or transferee's limited liability company interest.
   2. (b) Under a charging order, a judgment creditor has only the right to receive distributions to which the debtor-member or transferee would otherwise have been entitled from the limited liability company, and only to the extent of the judgment, including interest.
   3. (c) A judgment debtor that obtains a charging order does not thereby become the holder of the debtor-member's or transferee's limited liability company interest.
3. III. This section does not deprive any judgment debtor of the benefit of any exemption law applicable to the judgment debtor's membership rights.
4. IV. Except as provided in paragraphs VI and VII, a charging order is the sole and exclusive remedy by which a judgment creditor of a debtor-member may satisfy a judgment from a debtor-member's membership rights or from the assets of a limited liability company. This section is not exclusive as to the rights of creditors with respect to the limited liability company interests of transferees.

5. V.

   1. (a) The remedy of execution upon a debtor-member's membership rights shall be unavailable to a judgment creditor attempting to satisfy a judgment against a debtor-member of a multi-member limited liability company.
   2. (b) Except as provided in paragraph VI, the remedy of execution upon a debtor-member's membership rights shall be unavailable to a judgment creditor attempting to satisfy a judgment against a debtor-member of a single-member limited liability company.

6. VI.

   1. (a) If a judgment creditor shows to the satisfaction of a court of competent jurisdiction that distributions under a charging order in respect of the limited liability company interest of a debtor-member of a single-member limited liability company will not satisfy the judgment within a reasonable time, a charging order shall not be the sole and exclusive remedy by which the judgment creditor may satisfy the judgment against the member.
   2. (b) Upon such a showing, the court may order the sale of the debtor-member's membership rights under an execution sale.
   3. (c) A judgment creditor may make a showing to the court under subparagraph (a) that distributions under a charging order will not satisfy a judgment either (1) when the judgment creditor applies for the entry of a charging order under a member of a single-member limited liability company or (2) at any time thereafter.

7. VII. If, under paragraph VI, a court orders an execution sale of the membership rights of a debtor-member that is the member of a single-member limited liability company:

   1. (a) The purchaser shall obtain all of the member's membership rights and not merely the rights of an transferee;
   2. (b) The purchaser shall become the member of the limited liability company; and
   3. (c) The debtor-member whose membership rights have been sold shall cease to be a member.

8. VIII. Nothing in this section shall limit:

   1. (a) The rights of a creditor that has been granted a consensual security interest in the limited liability company interest or other membership rights of a member to pursue the remedies available to the secured creditor under other law applicable to secured creditors;
   2. (b) The principles of law and equity which affect fraudulent transfers;
   3. (c) The availability of the equitable principles of veil-piercing, equitable lien, or constructive trust, or other equitable principles not inconsistent with this section; or
   4. (d) The continuing jurisdiction of the court to enforce its charging order in a manner consistent with this section.
9. IX. In any action in a court of this state in which a judgment creditor seeks a charging order against a member or transferee of a foreign limited liability company, this section shall apply.

Source. 2012, 232:2, eff. Jan. 1, 2013.