LLC Judgment Debtors

If you're planning to sue a LLC, there are some possible complications one should consider; that can may be much more of an issue when you then attempt to enforce a judgment from that LLC debtor.

This article is my opinion and is not, a legal opinion. I'm a judgment broker, and not a lawyer. If you ever want a strategy to use or legal advice, please retain a lawyer.

Different from most people; limited liability companies may quickly choose to file for bankruptcy protection, "die", transfer or hide any assets, hide, sell themselves, or change their name.

Certain limited liability company companies play the "hide the pea" carnival game having somewhat related LLC "empty shell" companies; used for smoke screens to hinder judgment creditors. Certain judgment debtors put any available assets into several different limited liability companies, causing it to be really difficult to reach their non-available assets. Some limited liability companies are created to finance assets, making certain that no creditors can attach the assets.

LLCs and similar corporate entities all operate, and get protected, because of a complicated set of laws that generally shield their owners from any personal liability. In California, the charging order is the only way to reach a debtor's interests in a limited liability company.

Some relevant California laws include these sections of the Corporation Code: 1502(b), 1505, 1701, 17057(b), 15901.14, and 17061(b). In most States, corporations and limited liability companies must choose an actual individual, or a company with a natural person available; as their agent for process of service, within the state the LLC does any business.

When researching your LLC or any entities associated with them, your local State's Secretary Of State (SOS)'s web site is usually the best place to begin. Limited liability companies and other business structures, can choose some service company to be their agent for process of service. But, their service company must follow all Corporations Codes and all Secretary Of State's requirements.

You can put your LLC's name, or the LLC's (e.g.) service company, and the SOS will show you the company's corporate #. If a LLCs names a service company as its agent, only the name of that service company will appear on the Secretary Of State website.

At the State SOS website, one may also discover if your debtor is a limited liability company, a corporation, some limited partnership, etc. When the debtor or their service company isn't listed at the SOS website, perhaps they are perhaps operating as a DBA/fictitious name; and the business owner is that individual you might want to sue.

The four most important things to verify, before you sue a LLC, are:

1) Is the limited liability company profitable? Are they still doing business? Do they have any kind of available assets? If the answer for each is no; then there might not be any reason to sue that LLC; unless you are able to prove in court that those people behind them are actually alter-egos of their limited liability company, and also those folks own a certain amount of available assets.

2) What's your limited liability company's notoriety over the web, and with the court house? When there are many other judgments against that LLC, and/or the LLC has many people suing them, or when there are many gripes from many places on the internet; they might be having difficulties, so recovering a judgment from them will be difficult, so maybe try settling with them?

3) Did your or your lawyer list the judgment debtor's corporate entity type and name properly on your complaint? Did you look for other AKA names they might be using? Your LLC could be using several very similar names. It's most often easier and cheaper to attempt to amend your lawsuit to add all your debtor's AKA names, than to attempt to add those different AKA names after you win your judgment.

RipOff LLC, is not the same as Rip Off, LLC, or The RipOff Group, LLC. Sometimes, one may actually be some limited liability company, and other ones may actually be a limited partnership, etc. If the companies all got (e.g., filed or formed) on about the same dates, and/or all have the same agent for process of service, and/or identical websites, they may actually be AKAs of the judgment debtor.

If you need to use official documents as evidence, buy certified copies of them. If the court judge agrees with your evidence and arguments, you might be able to add all the AKAs of your LLC debtor as co-defendants on the judgment.

4) Is there's an actual reason to include one or more individuals as additional defendants in the lawsuit against the LLC debtor? The time for doing this is prior to when the judgment is final. It might be very expensive or impossible, to add people later, when the judgment becomes final.


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