The amended Operating Agreement to be provided contains similar provisions to the Operating Agreement used by Paladin Commerce Center, LLC and was instrumental in restricting a creditors rights in the management of the LLC after the members defaulted on a large loan. The invoice provides for the drafting, execution, transmission and follow-up to make sure this Amended Operating Agreement will superced the current agreement.

In other states creditors have become creative and tried actions such as foreclosure, in an attempt to control the management of the LLC and seize LLC assets. Nevada laws eliminate any "creditor creativity". Nevada has the toughest laws in the country with regard to creditors. In Nevada, per NRS 86.401 a charging order against a membership interest in an LLC is the EXCLUSIVE remedy by which a judgment creditor of a member may satisfy a judgment.

Recent developments in Nevada case law have given Nevada Judges the opportunity to confirm the intention of the legislators when they passed the toughest laws in the country with regard to creditors:

In Paladin Commerce Center, LLC, Debtor, General Electric Credit Equities, Inc. v. Barry Thalden, a Nevada Bankruptcy Judge held that despite the fact that a creditor (GE Credit) had obtained 100% of the membership interest of a Nevada LLC (the member pledged his membership for a $3.6 Million business loan, then defaulted), that the creditor was to remain ONLY an assignee of the economic and membership rights in the LLC and DID NOT obtain managerial and voting rights in the LLC because the ONLY method by which an assignee or transferee of a membership interest could obtain voting and management rights is pursuant to the Operating Agreement. Upon appeal, the district court affirmed the decision of the Bankruptcy Court.

The Operation Agreement of the LLC required the following in order to admit a “substituted member” with “voting rights”:

(a) the consent of the Managers approving such admission.
(b) the transferee was required to execute such instruments as the Managers may deem reasonably necessary to effectuate such admission;
(c) the transferee had to agree in writing to accept and adopt all terms and conditions of this Operating Agreement, as the non-transferring Members may reasonably determine.

In this case “Manager Consent” could be withheld because the “manager” and the “member” (who pledged the asset to the Bank) were not the same person. This under-scores the value of our Nominee Manager Service as not just a privacy tool, but also as an important legal protection tool.

If you have any further questions please do not hesitate to contact us.