Bankruptcy Law

Bankruptcy Law Questions? Ask a Bankruptcy Lawyer.

Ask a Lawyer,
Get an Answer ASAP!

Bankruptcy Law

In the state of Texas, can one partner of an LLC file

Customer Question
for personal bankruptcy without affecting...
In the state of Texas, can one partner of an LLC file for personal bankruptcy without affecting his or her interest in the business. In other words, what is to stop the trustee from taking their interest and selling it to pay creditors?
Submitted: 2 years ago.Category: Bankruptcy Law
Show More
Show Less
Ask Your Own Bankruptcy Law Question
Answered in 3 hours by:
6/8/2015
Bankruptcy Lawyer: Dimitry Esquire, Attorney replied 2 years ago
Dimitry Esquire
Dimitry Esquire, Attorney
Category: Bankruptcy Law
Satisfied Customers: 41,221
Experience: Provide General Practice advice to my clients in my practice.
Verified
Thank you for your question. Please permit me to assist you with your concerns.
No, it is not possible to file for personal bankruptcy without it potentially affecting the LLC. An LLC interest is an asset, it inherently has value, and yes, a trustee can potentially sell it as a means to pay down for some or all of the debt. The trustee won't be stop from selling the interest, although most trustees offer this benefit first to other partners, akin to a 'right of first refusal'.
Sincerely,
Dimitry, Esq.
Ask Your Own Bankruptcy Law Question
Customer reply replied 2 years ago
Is that specific to Texas? I have been told what you have said. I have also been told that Texas specifically has an exemption that allows that the only remedy is a "charging order" is the only legal procedure that personal creditors in Texas have. I have been told both which is why is is confusing.
Bankruptcy Lawyer: Dimitry Esquire, Attorney replied 2 years ago
Hello, this is an asset in all states and US territories. And while I have been looking for this 'remedy' online for you as a law, I just dot see that as a law. If it is exists, I do not see and did not find it.
Sincerely,
Dimitry, Esq.
Ask Your Own Bankruptcy Law Question
Customer reply replied 2 years ago
How do they determine the "inherent value" as you put it in your first response? The LLC is a couple of years old and still has a lot of debt. The LLC operating agreement has no provision for a member filing bankruptcy as well. The member that wants to file also has 49% interest if that makes a difference.
Bankruptcy Lawyer: Dimitry Esquire, Attorney replied 2 years ago
Hi,
That depends on how the evaluation can be made. All LLCs have value, and an accountant can be hired to evaluate business income versus current debts to estimate the actual cost of the company. The percentage does not make any difference, but if any member files, be it 1% or 99%, it can affect the LLC.
Sincerely,
Dimitry, Esq.
Ask Your Own Bankruptcy Law Question
Customer reply replied 2 years ago
Can you give me a little info on the "RULPA" charging order concept as it relates to Texas?
Bankruptcy Lawyer: Dimitry Esquire, Attorney replied 2 years ago
Hello, what specific information are you seeking?
Ask Your Own Bankruptcy Law Question
Customer reply replied 2 years ago
Maybe what I am asking is about information regarding the Texas (BOC) and its change in 2007. It is my understanding that they now use the "Delaware approach" to charging orders. Is this true? If a creditor obtains a charging order against one of the members of an LLC, how does that affect them being able to get a "salary" from the business, specifically if the partnership agreement says profit is 50/50.
Bankruptcy Lawyer: Dimitry Esquire, Attorney replied 2 years ago
One point of clarification please--you first mentioned an LLC, now you are asking about partnerships. Two two entities are quite different. Which entity is in place currently?
Ask Your Own Bankruptcy Law Question
Customer reply replied 2 years ago
It is an LLC with an operating agreement or regulations of the LLC. I said "partnership agreement" incorrectly.
Bankruptcy Lawyer: Dimitry Esquire, Attorney replied 2 years ago
Hi,
I appreciate the clarification. In that case RUPLA does not qualify, as that is designed for partnerships and not for closed corporations or LLC. There are other options available, but RUPLA is generally not on of them. Please see below:
http://www.americanbar.org/publications/the_business_lawyer/find/find_by_subject/buslaw_tbl_mci_rulpa.html
Sincerely,
Dimitry, Esq.
Ask Your Own Bankruptcy Law Question
Customer reply replied 2 years ago
Can you give info then on the change in 2007 in the BOC for Texas as it relates to charging orders. This was asked in the previous question. Can you please give your thoughts on this. Is a charging order the only remedy now in Texas. Since this is a multi-member LLC it is my understanding that they cannot "pierce the vail" like they can a single member llc. Is this correct? or is this misinformation?
Bankruptcy Lawyer: Dimitry Esquire, Attorney replied 2 years ago
That is not correct, ANY LLC can be pierced, multi-member or not, it is just harder to pierce a multi-member LLC as there is likely harder to show evidence of 'alter ego' and factors that would permit the piercing to occur.
As far as charging orders are concerned, that is NOT the only option in Texas--I have been reviewing state codes and do not see it as the sole remedy--please see this link for further information:
http://www.traderstatus.com/chargingorders.htm
As far as opining on the 2007 change, I am afraid that it will require additional research beyond the initial scope of your question, as it did not ask for such an analysis anywhere within that thread. If that is what you seek, please advise and I will forward an additional service request to you.
Sincerely,
Dimitry, Esq.
Ask Your Own Bankruptcy Law Question
Customer reply replied 2 years ago
Thanks for the info that you have given, however, I believe that this analysis should be in the included in the original thread as a clarification of that would actually answer the question that was asked originally. If the Texas BOC was not changed in 2007 to make the only remedy a charging order then your answer is correct. If the BOC was changed then the answer you have given will be incorrect. The only way to know is to find out if this in fact the case.
Bankruptcy Lawyer: Dimitry Esquire, Attorney replied 2 years ago
Texas does not have this as the only remedy--I do not and did not find any laws supporting that this change occurred. I do not see the charging order as the sole remedy in Texas either within Texas code, or on other supporting websites as well as more tangible sources in this instance.
Please take care.
Sincerely,
Dimitry, Esq.
Ask Your Own Bankruptcy Law Question
Ask Dimitry Esquire Your Own Question
Dimitry Esquire
Dimitry Esquire
Dimitry Esquire, Attorney
Category: Bankruptcy Law
Satisfied Customers: 41,221
41,221 Satisfied Customers
Experience: Provide General Practice advice to my clients in my practice.

Dimitry Esquire is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises!

Gary B.Edmond, OK

My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer.

EricRedwood City, CA

I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight.

MichaelWichita, KS

PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent.

Three H.Houston, TX

Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!!

ElaineAtlanta, GA

It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem.

TonyApopka, FL

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

< Previous | Next >

Meet the Experts:

Terry L.

Terry L.

Attorney

2,672 satisfied customers

Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.

cortrightlaw

cortrightlaw

Attorney

511 satisfied customers

Attorney practicing Bankruptcy Law including Chapter 7, Chapter 11, Chapter 12, and Chapter 13.

JoeLawyer

JoeLawyer

Attorney

376 satisfied customers

Attorney in the practice of Bankruptcy Law since 1996

A.J.

A.J.

Attorney

262 satisfied customers

Experienced consumer bankruptcy attorney.

Fritz

Fritz

Attorney

209 satisfied customers

Florida attorney with extensive experience in Chapter 7 and Chapter 13 consumer bankruptcy cases

Law Girl

Law Girl

Attorney

153 satisfied customers

I am an attorney.

Paul K, Esq.

Paul K, Esq.

Attorney

141 satisfied customers

10 years Exp., Great customer service, Prompt responses.

< Previous | Next >

Related Bankruptcy Law Questions
If I need to declare personal bankruptcy in New York State
If I need to declare personal bankruptcy in New York State and need to protect my business from creditors what should I create a Corporation or LLC ? This is a small one person operation with no emplo… read more
Roger
Roger
Litigation Attorney
Doctoral Degree
26,807 satisfied customers
A few years ago I lost a house to the trustees. It went on a
A few years ago I lost a house to the trustees. It went on a short sale. Now the Franchise tax board says I Tax Board says I "earned" $184,000.00 and that I owe them $20,000.00 in taxes. Of course I r… read more
FiveStarLaw
FiveStarLaw
Attorney
Doctoral Degree
477 satisfied customers
I am considering filing a chapter 7 personal bankruptcy. I
I am considering filing a chapter 7 personal bankruptcy. I know some years ago there were some changes in the bankruptcy laws. What I need to know, first of all, is how much money can be retained in a… read more
LegalGems
LegalGems
Juris Doctorate
10,176 satisfied customers
If you have a trial scheduled and the US Trustees Office is
If you have a trial scheduled and the US Trustees Office is trying to get your case dismissed and you have been dealing with your attorney who has been doing things that will get him disbarred, how do… read more
Michael Bradley
Michael Bradley
JD
1,131 satisfied customers
I filed personal bankruptcy chapter 7 in 2011 and chapter 13
I filed personal bankruptcy chapter 7 in 2011 and chapter 13 in 2012. I receive a discharge for chapter 7 in 2012 and paid off my chapter 13 obligation in 2016. I did not not receive a discharge in th… read more
DrakeLAW
DrakeLAW
Juris Doctorate
838 satisfied customers
Personal Bankruptcy Chapter 7 in Florida, owner of a
Personal Bankruptcy Chapter 7 in Florida, owner of a one-person S-Corp services business. In filing Ch 7 (Personal) BK I understand I will relinquish all non-exempt personal assets. Question is on S-C… read more
DrakeLAW
DrakeLAW
Juris Doctorate
838 satisfied customers
I am in need of filing a chapter 11 personal bankruptcy due
I am in need of filing a chapter 11 personal bankruptcy due to abnormal circumstances … read more
DrakeLAW
DrakeLAW
Juris Doctorate
838 satisfied customers
I have hard evidence that the Trustee and Trustee atty were
Hello - I have hard evidence that the Trustee and Trustee atty were negligent, breached their fiduciary duties and allowed my federal case of fraud in the inducement run the SOL, without pursuing as t… read more
Dwayne B.
Dwayne B.
Juris Doctor
28,499 satisfied customers
The Trustee in a corporate bankruptcy case erased and/ or
The Trustee in a corporate bankruptcy case erased and/ or deleted tape recorded testimony of a key witness in a 2004 bankruptcy rule deposition. what recourse do I have being that witnesses testimony … read more
Legal Eagle
Legal Eagle
Attorney
Doctoral Degree
5,946 satisfied customers
Second opinion] The Trustee in a corporate bankruptcy case
Second opinion] The Trustee in a corporate bankruptcy case erased and/ or deleted tape recorded testimony of a key witness in a 2004 bankruptcy rule deposition. what recourse do I have being that witn… read more
DrakeLAW
DrakeLAW
Juris Doctorate
838 satisfied customers
I understand in personal bankruptcy this cannot be done, but
I understand in personal bankruptcy this cannot be done, but In a business to business environment, is it legal to publicize debtors who have filed bankruptcy, such as the company name, principals & a… read more
INFOLAWYER
INFOLAWYER
Partner
Doctoral Degree
55,462 satisfied customers
My confirmation meeting is next week and th trustee wants a
my confirmation meeting is next week and th trustee wants a modified plan so i won't be confirmed, what may happen … read more
Phillips Esq.
Phillips Esq.
Attorney
Juris Doctor
17,996 satisfied customers
In the Utah code you sent me it states: 75-7-501 Rights of
In the Utah code you sent me it states: 75-7-501 Rights of beneficiary's creditor or assignee. "To the extent a beneficiary's interest is not protected by a spendthrift provision or Section 25-6-14, t… read more
Phillips Esq.
Phillips Esq.
Attorney
Juris Doctor
17,996 satisfied customers
I received notice from the Trustee of an "Order Striking
I received notice from the Trustee of an "Order Striking Filing For Failure To Comply With Required Procedures".I believe the problem is with a creditor who had an undeliverable address, however, I ha… read more
DrakeLAW
DrakeLAW
Juris Doctorate
838 satisfied customers
In personal bankruptcy, what can they take? If you have a
In personal bankruptcy, what can they take? If you have a house and a lot of little things in the house like furniture, clothes, books, etc. All the personal things people normally have that wouldn't … read more
Rovena Andoni
Rovena Andoni
Juris Doctor
10 satisfied customers
I recently made my last chapter 13 payment to the trustees
I recently made my last chapter 13 payment to the trustees office. I fell behind on my mortgage and have been in a trial modification. On the notice of final cure my lender stated the amount I was del… read more
socrateaser
socrateaser
1,031 satisfied customers
Does the trustee need a court order to sell a debtors
Does the trustee need a court order to sell a debtors primary residence? The equity is claimed as exempt, but the trustee believes there is more equity in the house than the debtor claimed. Reference … read more
Phillips Esq.
Phillips Esq.
Attorney
Juris Doctor
17,996 satisfied customers
If you file for personal bankruptcy in Florida and you own a
If you file for personal bankruptcy in Florida and you own a corporate asset, is that corporate asset considered separate from your personal assets? In other words, is it safe from being taken? Also, … read more
LawGuy
LawGuy
Juris Doctor
123 satisfied customers

DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

Show MoreShow Less

Ask Your Question

x