2012 LLC Institute: practical aspects of charging orders

 Potomac Boathouse

John Williams is attending a 2-day conference in Washington, D.C. called the LLC Institute. Jay Adkisson is now presenting on charging orders. His position is they should not exist. They are a historical bastard. Creditors don’t use this usually. They use alter ego or something else. There is no uniformity between states on post judgment collections. They are very state specific. He is telling story of case we worked on, called the Great West Coast Newspaper Wars. Talking about how to squeeze cash flow to collect judgment with two lawyers against an army of lawyers. Debtor came screaming into court. Then creditor says they can avoid this result by paying the debt. Charging orders require discovery upfront. Creditors were served notice of motion. But entities were not party to proceeding. This is personalty. He had the debtor in court. Other entities do not need to be brought in as parties. Just like getting a lien on Microsoft stock. Then debtors argue choice of law. In the collection law, all law is local. #chargingorder. Operating agreements were irrelevant because debtor did not sign agreements. The internal affairs doctrine does not apply to creditors. If they don’t pay on the charging order, then you request a receiver. That is the ultimate goal for a creditor. The lessons of this are you may not need to foreclose on the charging order. You can be very patient. Lesson two is local law applies in collection law. Lesson three is attempts to shift law to forum state can be defeated. Jay did a wonderful presentation.