Section 30-20 of the LLC Act (found at 805 ILCS 180/30-20) states that a creditor’s exclusive remedy is to obtain a charging order against an LLC member's distributional interest.
Illinois courts have held that this is a special remedy designed to allow a creditor of an LLC member to realize the value of the debtor’s distributional interest in the LLC and also protect both the LLC’s ability to function and the other members LLC interest.
A judgment creditor must file a motion with the Court requesting a Charging Order on the LLC member’s distributional interest. The LLC does not need to be named as a party defendant in this post-judgment action. The charging order will put a lien on the debtor’s LLC interest and any distributions coming due to the debtor can be paid to the creditor. The lien on the distribution can also be foreclosed on by the creditor and sold at a Sheriff’s sale or a private sale just like any other asset sale. It should be noted that distributional interest does not include salary, wages, draws or reimbursements. Therefore, the best practice would be for a creditor to simultaneously file a citation to discover assets and seek the other assets listed above in conjunction with a charging order on the distributional assets.
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