21-Mai-2024
Enforcement Case of the Month -- LLC You In Court: Recent Second Circuit Decision Affirms New York Law’s Creditor-Friendly Approach to Seizing LLC Membership Interests
Stubborn judgment debtors routinely look for ways to delay or increase the cost of collection. Aided by a vibrant “asset protection” industry in certain U.S. jurisdictions, they frequently turn to LLCs in those jurisdictions to retain the benefit of their property while shielding it from creditors, hoping that enforcement courts will defer to those states’ LLC acts and prevent turnover of membership interests. But a recent decision by the U.S. Court of Appeals for the Second Circuit provides some reason for optimism that, at least for debtors subject to personal jurisdiction in New York, these corporate shell games may not be entertained by courts in America’s financial hub.
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