Q: You obtain a large judgment against an individual and you want to collect. The judgment debtor has only one asset - he is a member of a NJ limited liability company (ie. he is an owner of the LLC). Can you force the sale of his ownership interest?
A: No. As a judgment creditor, you have the exclusive remedy of obtaining a Charging Order, which is a lien against the judgment debtor’s transferrable interest in the LLC and entitles you to payment of any distributions that would otherwise be paid to the judgment debtor. Unfortunately, since LLC members have control of whether and to what extent such distributions are made, judgment creditors cannot force payment and turnover of distributions. Charging Orders, therefore, are a “watch and wait” proposition - a remedy with questionable potential return.
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