Posted by John Merchant on August 03, 2004 at 17:08:10:
This is a very involved body of law, hotly contested in every multi-state lawsuit where the laws of the involved states do differ.
No simple answers in this arena & if it’s important to you to have a definitive answer, some lawyer should be retained to brief the question for you.
CCH is a very good place to start however, and a resource that lots of corp. lawyers know very well & utilize constantly.
CCH on forming LLCs out of state - Posted by Bob
Posted by Bob on July 21, 2004 at 20:39:41:
CCH (www.toolkit.cch.com) says this about forming an LLC out of state:
"Some states do not offer adequate protection for the owner’s business interest in a limited liability company (LLC) against the claims of the owner’s personal creditors. These states model their LLC statute’s charging order remedy on the general partnership provision that allows for foreclosure of the interest and forced liquidation of the business.
Many states, including Delaware and Nevada, offer protection for the business interest. These states model their LLC statutes on the charging order concept found in the Revised Uniform Limited Partnership Act (RULPA). If the business owner’s home state does not offer this business interest protection, serious consideration should be given to forming an LLC in a state that does offer such protection."
Is this correct? My understanding was that the law of the forum state controls, not the law of the state of formation. That is, if I own an interest in a Delaware LLC, but am sued in a state (like Texas) that permits foreclosure of LLC interests, my interest can be foreclosed notwithstanding Delaware law to the contrary, especially if the LLC is registered to do business in the forum state.