Abstract

http://ssrn.com/abstract=894571
 


 



In Re Ehmann: Bankruptcy Court Decision Portends Problems for Manager-Managed LLCs


Susan Kalinka


Louisiana State University, Baton Rouge - Paul M. Hebert Law Center


Taxes - The Tax Magazine, Vol. 84, p. 5, January 2006

Abstract:     
The LLC has been touted for its many advantages, one of which is the ability of an LLC to protect the assets from claims of creditors of persons that are members in the LLC. In the case of In re Ehmann, [1] however, the Bankruptcy Court for the District of Arizona held that a trustee in bankruptcy had the power to exercise all of the management rights held by a debtor who was a member of an LLC. The court indicated that the trustee's rights might include such broad powers as the right to redeem the LLC interest, seek appointment of a receiver to operate the LLC in accordance with the LLC's purposes and the members' rights or to seek the dissolution, winding up, and liquidation of the LLC. The result in Ehmann raises concerns that bankruptcy courts may be willing to allow trustees in bankruptcy to interfere with the management of an LLC for the benefit of a debtor's creditors and to the detriment of the nondebtor members of the LLC. This column discusses the Ehmann case and its relevance to persons who own interests in an LLC.

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Date posted: July 2, 2006  

Suggested Citation

Kalinka, Susan, In Re Ehmann: Bankruptcy Court Decision Portends Problems for Manager-Managed LLCs. Taxes - The Tax Magazine, Vol. 84, p. 5, January 2006. Available at SSRN: http://ssrn.com/abstract=894571

Contact Information

Susan Kalinka (Contact Author)
Louisiana State University, Baton Rouge - Paul M. Hebert Law Center ( email )
440 Law Center Building
Baton Rouge, LA 70803
United States
225-578-8846 (Phone)
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