Charging Order Receiver Could Not Exercise Control Over LLCs

Charging Order Receiver Could Not Exercise Control Over LLCs

      In a recent decision from Florida, the court held that a receiver appointed pursuant to the charging order statute could not exercise managerial control over the LLCs. McClendon v. Dakem & Associates, LLC, 42 Fla. L. Weekly D1189, 2017 WL 2298443 (Fla. 5^th Dist. Ct. App. May 26, 2017).

      Dakem was successful in receiving charging orders against McClendon’s interest in numerous LLCs, those charging orders in furtherance of judgments in favor of Dakem. In four instances, with respect to LLCs controlled by McClendon, the receiver was charged to exercise managerial control over the companies. McClendon challenged the receiver’s exercise of those rights, asserting they were outside the scope of the statute. The Court agreed with that determination, writing:

[T]he charging order should only have divested [McClendon] of her economic opportunity to obtain profits and distributions from the LLC, charging only her membership interest, not her managerial rights. To the extent that the order appointing the receiver authorized the receiver to exercise managerial control over the LLCs, it exceeded the permissible scope and is reversed. In sum, the order granting the charging order and appointing a receiver is affirmed; however, the portions of the order permitting the receiver to be the financial officer of the LLC and exercise managerial control is reversed.