Notice: All new and existing entities will need to file a Beneficial Ownership Information Report with FinCEN. Click here to learn more.

Delaware LLC Charging Order is Not Just Exclusive Remedy, Also “Sole” Remedy

By John Williams | Published August 5, 2013

A new Delaware law confirms that the charging order is the sole and exclusive remedy for judgment creditors. This means that other remedies, such as attaching, garnishing, and foreclosing on the interest are not permitted under Delaware law. Charging orders mean that a debtor’s interest can only be assigned to a judgment creditor, giving only the right to distributions. By denying the creditor control rights, this protects the original ownership and management of the business.

This law also extends to partnerships and limited partnerships, as well as LLCs. Regarding LLCs, the law makes it clear that the charging order is the sole and exclusive remedy of judgment creditors whether the LLC in question is single member or has multiple members.

When deciding where to form your company, consider that Delaware has advantages over your home state that may benefit you. Go