As discussed in my December 24, 2010 blog, Michigan has just enacted legislation which catapults it into first place when deciding which state has the best law for limited liability companies if asset protection issues are present. In Michigan, it is now beyond doubt that the charging order is the exclusive remedy for judgment creditors of LLC members.

A major concern of Michigan lawyers practicing in the asset protection field was whether under the pre-amendment law a judgment creditor of a single member LLC could obtain all of the rights of the member in the LLC. If so, the judgment creditor could liquidate the LLC and reach its assets. There was certainly ample precedent out there from other states …… Albright in Colorado and Olmstead in Florida, to support the notion that judgment creditors of Michigan LLC members could grab the whole enchilada. However, by making the charging order the exclusive remedy for judgment creditors and specifically stating that a court order to which a member may have been entitled, such as providing an accounting or answering an inquiry, is not available to a judgment creditor, judgment creditors of single member LLC’s will not be able to reach the member’s interest.

If there is any doubt as to the intent of the law as it regards single member LLC’s and the rights of judgment creditors review the Analysis of Michigan Enrolled Senate Bill 1455 which states that the amendment was in part a response to the decision in the Olmstead case and lawmakers wanted to clarify legislative intent on the issue.

To potential clients and other asset protection lawyers around the country, give me a call. The Michigan Limited Liability Company Act is very business friendly, extremely flexible and now, with enhanced asset protection built in, the pick of the litter.

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