In Hotel 71 Mezz Lender LLC v. Falor, 2008 NY Slip Op 09848 (NY AD [1st], December 16, 2008), the Court correctly vacated a trial court
pre-judgment order confirming the ex parte attachment of their membership interests in 23 entities, including Delaware, Georgia and Florida limited liability companies and a solely owned Florida corporation, and the subsequent orders conditionally appointing a receiver of those out-of-state interests.
Slip Op at 2.
The odd thing about the trial court order, and in the appellate opinion, is the absence of recognition of the concept of charging orders. In most states, including New York, a charging order is the exclusive manner by which a creditor can get at an interest in a limited liability entity (LLE). One would hope that somewhere among the trial court judge, the four appellate justices, and the eleven (!) lawyers listed in the opinion–and their associates or clerks), someone might have brought that concept to the attention of the court. Perhaps someone did, but that person’s advice was ignored.
Certainly, that must say something about the state of legal education system and its products (lawyers). But only about a third of law schools offer a separate course in Agency, Partnerships and LLEs. Even in those schools, most students do not take both Corporations and A&P. The usual Business Associations course virtually ignores agency, and only gestures in the direction of partnerships and LLEs; then it’s off to talk about public corporations and control transactions.
posted by Gary Rosin
This entry was posted on Wednesday, February 4th, 2009 at 4:30 pm and is filed under Commentary, LLCs, Teaching. You can follow any responses to this entry through the RSS 2.0 feed.
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Creditors and Interests in LLEs: A Rant on Reading Hotel 71 Mezz Lender LLC v. Falor
In Hotel 71 Mezz Lender LLC v. Falor, 2008 NY Slip Op 09848 (NY AD [1st], December 16, 2008), the Court correctly vacated a trial court
Slip Op at 2.
The odd thing about the trial court order, and in the appellate opinion, is the absence of recognition of the concept of charging orders. In most states, including New York, a charging order is the exclusive manner by which a creditor can get at an interest in a limited liability entity (LLE). One would hope that somewhere among the trial court judge, the four appellate justices, and the eleven (!) lawyers listed in the opinion–and their associates or clerks), someone might have brought that concept to the attention of the court. Perhaps someone did, but that person’s advice was ignored.
Certainly, that must say something about the state of legal education system and its products (lawyers). But only about a third of law schools offer a separate course in Agency, Partnerships and LLEs. Even in those schools, most students do not take both Corporations and A&P. The usual Business Associations course virtually ignores agency, and only gestures in the direction of partnerships and LLEs; then it’s off to talk about public corporations and control transactions.
posted by Gary Rosin
This entry was posted on Wednesday, February 4th, 2009 at 4:30 pm and is filed under Commentary, LLCs, Teaching. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.