There are relatively few types of assets that are statutorily protected from claims of creditors. Membership interests in limited liability companies (“LLCs”) and partnership interests are afforded a significant level of protection through the charging order mechanism.

The Importance of History

Before the advent of the charging order, a creditor pursuing a partner in a partnership was able to obtain from the court a writ of execution directly against the partnership’s assets, which led to the seizure of such assets by the sheriff. This result was possible because the partnership itself was not treated as a juridical person, but simply as an aggregate of its partners.

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