Charging Order Clause Samples
A Charging Order is a legal mechanism that allows a creditor to obtain a security interest in a debtor's share of a partnership or limited liability company (LLC). When a member or partner owes a debt, the court can issue a Charging Order directing the business entity to pay the debtor's share of distributions directly to the creditor until the debt is satisfied. This clause ensures that creditors can collect on debts without disrupting the management or ownership structure of the business, thereby protecting the interests of other members or partners while providing a means for debt recovery.
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Charging Order. Any Member whose membership interest is subject to a charging order as provided in Section 703 of the Act shall remain a Member and retain all rights and powers of a Member except the right to receive distributions to the extent charged. The judgment creditor shall have only the rights of an assignee of a membership interest as provided in Section 6.1.
Charging Order. On application by a judgment creditor of a member or transferee, a court may enter a charging order against the transferable interest of the judgment debtor for the unsatisfied amount of the judgment. A charging order requires the limited liability company to pay over to the person to which the charging order was issued any distribution that would otherwise be paid to the judgment debtor.
Charging Order. If there is a standing Charging Order issued by any Court or similar jurisdictional authority against a Member or Manager of the Company, and their assets or ownership of the Company, there shall be no distributions to any Member to which a standing Charging Order has been issued and any allocations of income shall be reported to the beneficiary or plaintiff benefitting from any such Charging Order.
Charging Order. On application to a court of competent jurisdiction by any judgment creditor of a Member, the court may charge the Limited Liability Company Membership interest of the Member with payment of the unsatisfied amount of the judgment with interest. To the extent so charged, the judgment creditor has only the rights of an assignee of such interest. This Operating Agreement does not deprive any Member of the benefit of any exemption laws applicable to the Member's interest.