Arkansas Senate Bill SB319

Arkansas 2025 Regular Session

• Introduced: 2/26/25
• Refer: 2/26/25
• Report Pass: 3/11/25
• Engrossed: 3/13/25
• Refer: 3/13/25
• Report Pass: 3/19/25
• Enrolled: 4/1/25
• Chaptered: 4/7/25
• Passed: 4/7/25

Caption

To Amend The Uniform Limited Liability Company Act; And To Clarify Charging Orders Under The Uniform Limited Liability Company Act.

Impact

The legislation is expected to enhance the clarity and effectiveness of the process by which judgment creditors can enforce claims against the membership interests of debtors in limited liability companies. By defining the process clearly, SB319 aims to prevent potential abuse or misunderstanding regarding the rights of creditors and the protections for members within the structure of a limited liability company. This could alter interactions between members and creditors, enabling creditors a more structured method for claiming debts while still maintaining protections for the members.

Summary

Senate Bill 319 aims to amend the Arkansas Uniform Limited Liability Company Act to clarify the use of charging orders in cases where a member of a limited liability company is a judgment debtor. The bill establishes that a charging order constitutes a lien on a judgment debtor's transferable interest in the company and provides the procedural requirements for charging orders. This includes stipulations on when and how such orders can be issued, as well as the rights of judgment creditors and the implications for members of the limited liability company.

Sentiment

The general sentiment around SB319 appears to be favorable, as evidenced by its unanimous passage through the voting process with 97 yeas and no nays. This suggests a broad consensus among lawmakers that the amendments are necessary to improve the existing legal framework surrounding limited liability companies and the implications of debt enforcement against their members.

Contention

Despite the bill's smooth passage, some potential points of contention may arise among stakeholders in the business community and legal advisors. Critics could argue that the bill may inadvertently limit protections for members if creditors are granted too much leeway in enforcing charging orders. Additionally, there could be concerns about how these changes may impact the balance of power between individual members and creditors, affecting the attractiveness of limited liability companies as a business structure.