Florida, like all states, has a special statute in place enunciating the procedures and protections of a limited liability company. One of the major benefits of registering your company as a limited liability company is limited liability, as the name indicates. Limited liability means that you are not personally liable for debts your company accumulates. However, if you accumulated debts prior to joining or registering a limited liability company, you are still on the hook. While your creditor cannot go after the LLC’s property, there are still ways for that creditor to come after you.
Take for example the following scenario: Three life-long friends decide to form a limited liability company in Florida. One of these three friends owed a bank fifty thousand dollars from a previous, unsuccessful business venture. The bank cannot go after the assets of the limited liability company. However, the bank has options to recover what belongs to them.
Creditors have several options as to how to go about acquiring a owner’s funds that have now been tied up in a limited liability company, and therefore otherwise protected. One option is obtaining a charging order requiring that the LLC pay the creditor all the money that otherwise would be paid out to the owner in debt to them. The charging order permits the creditor to claim a right to the owner’s financial rights, but does not allow the creditor to participate in the management of the LLC. The second option is foreclosing on the owner’s LLC ownership interest. Finally, the creditor can attempt to get a court order to dissolve the LLC, have its assets sold, and recover the assets that would otherwise go to the owner.
Owners in a limited liability company may not be free from previous debts. In many situations, an owner whose assets are now tied up in the now-registered limited liability can still be exposed due to previous debts. Creditors do have options to acquire what is owed to them. If you are concerned your assets or limited liability company may be exposed to fulfill previous debts, it may be time to consult the right legal team. Call the Trembly Law Firm at (305) 431-5678 today to schedule a consultation.