Ran across this on the First American Title Insuance Site and have excerpted it here.
Are you familiar with this case? What do you think the outome will be for LLC for asset protetion?
Jack Murray Reference, Restrictions on the Use of an LLC as an Asset-Protection Vehicle
Restrictions on the Use of an LLC as an Asset-Protection Vehicle
by John C. Murray
2003. All rights reserved.
The efficacy of a single-member limited liability company(“LLC”) as an asset-protection vehicle has been thrown into doubt by a Colorado bankruptcy-court decision. In In re Ashley Albright, 2003 Bankr. LEXIS 291 (Bankr. D. Colo. April 4, 2003), the debtor, who filed a Chapter 13 bankruptcy petition that was later converted to a Chapter 7 liquidation, was the sole member and manager of a Colorado LLC at the time of the filing. The LLC was not a debtor in bankruptcy. The Chapter 7 trustee contended that because the debtor was the sole member and manager at the time the debtor filed bankruptcy, the trustee now controlled the LLC and could therefore sell the real property owned by the LLC and distribute the net sales proceeds to the bankruptcy estate…
The entire discussion can be found on the First American Title Site.
The single member LLC is one layer in the equation. It will protect you from liability, but may not give you creditor protection, in light of the CO case. If you want additional protection, consider a “master” LLC or FLP to be the single member of your multiple LLCs.
As far as knew I thought even in a multi member LLC the member could lose their share in a case where they file personal BK.
The court might not be able to force the sale of any assets in a multi member LLC, but I thought they could attach any interest the member had.
Now if the case vere reversed where the LLC filed BK then that would not affect the member’s personal assets. But where the member files personal BK then their share of the LLC could be attached.
And I think a very interesting site of what is happening in the legal world.
Just scroll down until you get to the section on "LLC’S’ and then second from the bottom you will find the article.
Hope all is well with you. Never did hear back from you last year as to whether or not you got your system working properly and got the data I sent on title holding trust, etc???
How is REAPS?
C U Next time I am in Tacoma.
Snowed here all day Wednesday, nice crisp morning of 29 degrees…got all the way up to 32. Today woke up to 35 …sort of a heat wave.