If a member of an LLC or partnership is a judgment debtor, their interest can be subject to a charging order that places a lien on the interest and requires that all distributions be redirected to the creditor. If the LLC or partnership fails to comply with the charging order, then the LLC or partnership and the non-debtor members can be held in contempt for failing to comply with the charging order. But what if the debtor no longer held the interest at the time the charging order was granted? Can these other parties still be held in contempt for violating the charging order?
In 2004, Mark and Annesse Brockley sold real estate to Allen Rosenfeld and John McGill. The purchase price was $2 million and seller-financed: Rosenfeld and McGill promised to make monthly payments to the Brockleys for 20 years. If there was a default, the entire amount due accelerated after 30 days.
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