Serving Charging Orders

In the state of California, while it might be unfair to creditors, but the only available way for the creditor to get their debtor's rights and interests (and also the liabilities) to the LLC's distributions or ownership (or a limited or general partnership) is to use a (CCP 699.720(a)) charging order.

This is one of my many judgment-related: I'm the Judgment referral expert, not an attorney. This article is only my opinion based on my long term experiences, please hire an attorney when you require legal advice.

Certain judgment recovery specialists several times have said "When lots of cash is at stake, then I will pay for a personal process service. Otherwise, I will serve the papers using first class mail". Some other judgment recovery specialists ask me if they is able to save some money by serving process of their charging orders upon limited liability companies using certified mail or mail, and I always tell everybody I'm not an attorney.

In the state of California and most likely in every state, one should hire a registered process server to personally serve any court orders upon all named parties. After all the court orders are personally served, one files their proof of service(s) and the pleadings and original documents at the court clerk.

In an ongoing mission to try to reduce expenses, certain recovery specialists have been dreaming of finding tiny loop holes within the California statutes. They've got a charging order, ready to serve. The enforcers see a few CCPS about using charging orders (California Codes of Civil Procedure (CCPs) 684.010-080 and CCP 708.310-320, and cannot find any places where the codes say personal document servicing of court papers is needed.

Court service of documents also is described in CCPs 1010 and 1005, but these CCPs don't cover the requirement of using personal process. Looking at the laws might cause someone to think that court orders may be properly served using the mail, unless some law says you cannot.

Proper service of your proposed charging order will be vital. After your proposed charging order gets approved, your consideration will be, just how solid should the service proof to be, showing that the other partners/members and/or the entity got your proposed order; meaning the party(s) will be held accountable to your process service?

Whether a partnership or limited liability company responded or opposes to the properly served motion is not the only thing that counts. After they are served properly, they will be "parties of interest". When the entity gets served personally and then becomes a party to the court, they may get served future papers as per CCPs 1011 and 1010, which means they may get served using the mail; as long as they already were personally served.

To properly serve papers on general partnerships, attempt to properly serve the listed registered agent for the process service (Corporation codes 17601 and 16310(b)), and CCP 416.40(a). When one can't locate the serve to agent or the agent avoids being served, one may legally serve using first class first class mail (CCP 415.30 and Corporation Code 16310(d)). If the agent fails to respond within twenty days, you might request that your court to approve an order allowing you to serve the paperwork upon the Secretary of State's office.

If you have court papers served upon a limited liability company or some partnership, there's limitations on whom one may legally serve court papers on. Most often, you may only serve the individual listed as the business's agent for serving process (CCP 416.10), when the individual can be successfully located. You may use the business address as listed with your Secretary of State's office to serve the individual, and later do sub-service on your documents upon the individual running that company (CCP 415.20(a)).

When the business's agent cannot be found and/or will not permit service of the papers, then you need to then serve all the of the members of that limited liability company. How do you serve process on all of the limited liability company members? The member list is most often not stored somewhere that you will be able to find easily. One could find all the members, it's just not so quick or easy to accomplish. Here's a method of finding who the limited liability company members actually are:

1) Write a letter to your Secretary of State's office. Request the organizing documents of the limited liability company and also mail them your check with no amount written down and "not to exceed XX" on the check. It is best to write "not to exceed", of about twice whatever they are you think the charge will be. Your secretary of state's office won't rip you off, making it is very safe to do. After you receive the records, you'll find out whom the managing member and secretary of that limited liability company actually is.

2) Have your debtor personally served for your debtor exam, and the LLC's managing member personally served for your third-party exam (In California, an OEX/ORAP) including a good faith belief the limited liability company possesses at least two hundred and fifty of the debtor's assets.

If you can, have the limited liability company's secretary served personally, including a subpoena duces tecum. On the subpoena duces tecum, be sure you specify they produce their membership register and the minute book, which lists the ownership percentages and names of all the LLC's non-managing members.

3) Presuming both the LLC's managing member and the secretary appears (this is not a guarantee) you'll quickly get the full names of the LLC members. On a court motion for a proposed charging order for the rights and interests of your debtor in that limited liability company; you should have your declaration which states that you already have performed your exam on the LLC's managing member, and also subpoenaed the secretary of the limited liability company, that provided the documents listing all the members of the limited liability company (see exhibit X).

After that, you will be able to serve all of the limited liability company members, and file your proofs of service for all of them at your court. On another hearing date, one will be able to make a request of the judge something similar to "Your honor, please approve this charging order".

When the limited liability company runs out of an office, one can have their process server, properly serve the proposed motion upon the LLC's managing member. There's not any directors in limited liability companies, which means one can have their managing member personally served or, when they're not servable, you need to serve each of the limited liability company members. When the secretary or the managing member got served personally served, one may then serve all of the limited liability company members with mail.

Mark Shapiro - Judgment Broker - - the place Judgments go and are quickly Collected.

This article was published on 14 Sep 2014 and has been viewed 888 times
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