Attacking Asset Protection LLCs

Hillman & Loewenstein, Research Handbook on Alternate Business Forms, Forthcoming

18 Pages Posted: 20 Nov 2014

See all articles by Franklin A. Gevurtz

Franklin A. Gevurtz

University of the Pacific - McGeorge School of Law

Date Written: November 18, 2014

Abstract

This chapter in a forthcoming book (to be published by Edward Elgar) addresses LLCs set up to protect property personally used by the LLC's owner from seizure by the owner's creditors (asset protection LLCs). The normal remedy available to creditors of owners of an LLC is a charging order commanding the company to pay to the creditor, instead of the debtor, the debtor’s share of any distributions the company makes. This does not work when the LLC is set up to hold assets personally used by a solitary owner rather than to operate a business. The chapter examines the creditor’s remedies based upon creative use of charging orders, bankruptcy law, fraudulent transfer statutes and reverse piercing. The chapter argues, contrary to existing scholarship in the area, that properly understood and aggressively applied, these remedies are sufficient to prevent abuse.

Keywords: Asset Protection, Reverse Piercing

Suggested Citation

Gevurtz, Franklin A., Attacking Asset Protection LLCs (November 18, 2014). Hillman & Loewenstein, Research Handbook on Alternate Business Forms, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2527016

Franklin A. Gevurtz (Contact Author)

University of the Pacific - McGeorge School of Law ( email )

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Sacramento, CA 95817
United States
916-739-7111 (Phone)
916-739-7105 (Fax)

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