Article on Charging Orders

Jay D. Adkisson recently published an Article entitled, Charging Orders: The Peculiar Mechanism, 61 S.D. L. Rev. 440 (2016). Provided below is an abstract of the Article:

The charging order is an oddity of American law, occasionally appearing in old opinions pre-dating World War I to address odd situations in garnishment law, but is now almost exclusively found in the law of partnerships, and more recently limited liability companies (“LLCs”). Yet, in the area of LLCs, the charging order has taken on a life and aura of its own, with some states racing each other to have the “best” charging order provisions, so as to foster entity formation and registered agents business within those states. Creditors at the same time, while of course describing the “race” in less than flattering terms, have been developing their own strategies for defeating or circumventing the much-ballyhooed “exclusivity” of the charging order remedy. To understand why this unique remedy even exists, and why it has graced or cursed the area of partnership and LLC law, we must retrace the history of Anglo-American law to where a fork in the road developed in how each country would handle security interests that were created by creditor claims.