Rights of creditors of limited liability companies revised.
ENTITLED, An Act to
revise the rights of creditors of limited liability companies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
be amended to read as follows:
(a) On application by a judgment creditor of a member of a limited liability
company or of a member's transferee, a court having jurisdiction may charge the distributional
interest of the judgment debtor to satisfy the judgment.
The court may appoint a receiver of the
share of the distributions due or to become due to the judgment debtor and make all other orders,
directions, accounts, and inquiries the judgment debtor might have made or which the
circumstances may require to give effect to the charging order.
(b) A charging order constitutes a lien on the judgment debtor's distributional interest.
court may order a foreclosure of a lien on a distributional interest subject to the charging order at
any time. A purchaser at the foreclosure sale has the rights of a transferee.
At any time before foreclosure, a
distributional interest in a limited liability company
which is charged may be redeemed:
By the judgment debtor;
With property other than the company's property, by one or more of the other members;
With the company's property, but only if permitted by the operating agreement.
(d) This chapter does not affect a member's right under exemption laws with respect to the
member's distributional interest in a limited liability company.
(e) This section provides the exclusive remedy
by which a judgment creditor of a member or
a transferee may
that a judgment creditor of a member's distributional interest or a member's
assignee may use to
satisfy a judgment out of the judgment debtor's
interest in a
limited liability company.
No other remedy, including foreclosure on the member's distributional
interest or a court order for directions, accounts, and inquiries that the debtor, member might have
made, is available to the judgment creditor attempting to satisfy the judgment out of the judgment
debtor's interest in the limited liability company, and no other remedy may be ordered by a court.
Signed March 3, 2007