Evaluating the Latest Developments in the World of Single-Member LLCs
Special regard may need to be given in Florida to single-member LLCs. While it is true that there is nothing that recognizes single-member LLCs to be any less deserving of their outer liability protections, no different than a wholly-owned corporation, there are considerations. Certainly, Florida's Revised LLC Act recognizes that one can form a LLC, by and through an authorized representative and operate with only one member. See F.S. § 605.0201(1)(“One or more persons may act as authorized representatives to form a limited liability company by signing and delivering articles of organization to the department for filing.”); F.S. § 605.0401(1)(“If a LLC is to have only one member upon formation, the person becomes a member as agreed by that person and the authorized representative of the company. That person and the authorized representative may be, but need not be, different persons. If different persons, the authorized representative acts on behalf of the initial member”).
Florida's charging order provisions need to be reviewed.
Consumers and practitioners must still deal with the fact that with the Florida Supreme Court's decision in Olmstead v. FTC, 2010 Fla. LEXIS 990 (June 24, 2010), courts are permitted to order a judgment debtor to surrender all right, title, and interest in the debtor's single-member limited liability company to satisfy an outstanding judgment. See F.S. Section 605.0503 (Charging Order). Section 605.0503(4), in the case of a LLC that has only one member, if a judgment creditor of a member or a member's transferee establishes to the satisfaction of a court that distributions from the LLC will not satisfy a judgment within a reasonable time, then a charging order is not the sole and exclusive remedy upon which the judgment creditor can seek to satisfy the judgment, and upon such a showing, the court MAY order the sale of the LLC interest pursuant to foreclosure sale. See also Regions Bank v. Hyman, 2015 WL 1912251 (M.D. Fla. 2015); Wells Fargo Bank, N.A. v. Barber, 85 F.Supp.3d 1308 (M.D. Fla. 2015)(interpretation of predecessor Section 608.433).
If you are an owner of a closely-held business entity and want to know more about piercing of the veil and charging order liens, please contact us.
If you have concerns or questions about any of these alternative legal theories and wish to consult with the Tufts Law Firm, please contact us.