Relating to a membership interest in a limited liability company subject to a charging order.
Impact
The bill's clarification is significant for business law as it ensures that all types of limited liability companies are treated consistently concerning charging orders. This consistency is crucial for protecting the rights of creditors and ensuring that members' interests can be subjected to appropriate legal remedies. By solidifying the legal framework around charging orders, the bill aims to promote a more predictable business environment for LLC owners and creditors alike.
Summary
SB433 is a legislative proposal that addresses the applicability of charging orders to membership interests in limited liability companies (LLCs) in Texas. The bill amends Section 101.112 of the Business Organizations Code by explicitly stating that the charging order provisions apply to both single-member and multiple-member LLCs. By clarifying this aspect of the law, the bill aims to remove any ambiguities that previously existed regarding how charging orders could affect ownership interests in LLCs.
Contention
There were discussions among legislators about the implications of this bill, particularly concerning the potential impact on existing LLC owners and creditors’ rights. Some members expressed concerns about whether the bill fully protects the interests of all parties involved, including the potential for undue hardship on debtors with limited resources. However, the overarching sentiment was that clarifying the laws surrounding charging orders was necessary to avoid confusion and ensure fair legal practices.
Notable_points
SB433 is positioned as a straightforward legal clarification rather than a controversial overhaul of existing law. It reaffirms the principle that charging orders apply uniformly to LLC interests, which should benefit both businesses and creditors. The effective date of the bill is set for September 1, 2015, signaling the legislature's intent to implement these changes promptly.