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Today, a well know legal professor (expert in business organizations law) filed a brief in a landmark Florida case that addresses a fundamental single member LLC matter. If the court agrees with his position, this could mean the definitive end to any charging order protection for the single member LLC.

State LLC laws have never differentiated between a limited liability company that has one member and one that has multiple members when it comes to liability protection. It is well recognized that every LLC provides a layer of protection stating that owners are not personally liable for business liabilities merely because they are owners. This is known as forward liability protection.

However, an LLC in most states also offers what is known as reverse liability protection or charging order protection. This protection basically states that if a member is personally sued for a non-business related obligation and is found liable, the creditors cannot take full ownership of the member’s LLC interest in the LLC. The creditor’s rights are limited to the economic interests. In effect, this allows the member to retain the control he had in the LLC business.

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