Ohio law now limits a creditor’s remedy to the charging order when trying to get money out of an LLC.
For a more extensive discussion on what a charging order is, see my earlier article here.
The Ohio Legislature finally got around to limiting creditors’ remedies when trying to gain assets to a debtor’s cash in an LLC. As of mid-2012, the relevant statute now reads:
(A) If any judgment creditor of a member of a limited liability company applies to a court of common pleas to charge the membership interest of the member with payment of the unsatisfied amount of the judgment with interest, the court may so charge the membership interest. To the extent the membership interest is so charged, the judgment creditor has only the rights of an assignee of the membership interest as set forth in section 1705.18 of the Revised Code. Nothing in this chapter deprives a member of the member’s statutory exemption.
(B) An order charging the membership interest of a member of a limited liability company is the sole and exclusive remedy that a judgment creditor may seek to satisfy a judgment against the membership interest of a member or a member’s assignee.
(C) No creditor of a member of a limited liability company or a member’s assignee shall have any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the limited liability company.
This is great news for investors with Ohio LLCs. No longer can a creditor, in an effort to clean you out of your personal assets, go to court and petition for a firesale of your LLC assets. They can only gain access to the distributions you would normally be entitled to in normal business.