Charging Order

A court-authorized right granted to a judgment creditor to attach distributions made from a business entity, such as a limited partnership (LP) or limited liability company (LLC), to a debtor who is a partner of the business entity.

The charging order is usually limited to the dollar amount of the judgment and is akin to a garnishment of wages or income. It does not give the creditor management rights in the entity, nor can the creditor interfere in the management of the entity to which the debtor is a partner/member.

There are some states that do not limit creditors to a charging order to satisfy their claim. These states, based on varying criteria and circumstances, allow the creditor to foreclose on the interest of the debtor in the investment-based entity. In essence, the creditor can force the liquidation of the entity in order to satisfy the claim against the debtor.

In particular, a debtor's interest in a single-member LLC may be foreclosed upon in addition to the grant of a charging order. The reasoning is that there are no other non-debtor members whose interests need be protected; therefore, the entity can be liquidated and the proceeds used to satisfy the creditor's judgment claim.

Charging order limitations, in the states that have them, such as California, are a good way to protect partnership assets. They are also common in the U.K.

Investment dictionary. . 2012.

Look at other dictionaries:

  • charging order — An order of court obtained by a judgment creditor charging the interest of a judgment debtor in a general or limited partnership with payment of a judgment against the debtor. This order may be obtained even if the judgment is not against the… …   Glossary of Bankruptcy

  • charging order — an order of the court granting the applicant a charge over property belonging to a debtor of the applicant. Collins dictionary of law. W. J. Stewart. 2001. charging order …   Law dictionary

  • Charging order — A charging order, in English law, is an order obtained from a court or judge by a judgment creditor, by which the property of the judgment debtor in any stocks or funds or land stands charged with the payment of the amount for which judgment… …   Wikipedia

  • charging order — /ˈtʃadʒɪŋ ɔdə/ (say chahjing awduh) noun Law an order preventing the transfer of the stock, shares, funds or annuities held by one whom the court judges to be a debtor …   Australian English dictionary

  • charging order — A term of the English practice for a court order subjecting the stock or funds in a public company, belonging to the judgment debtor, to the satisfaction of the judgment …   Ballentine's law dictionary

  • charging order — noun Britain : an order of court making a judgment debt a charge upon the stocks or funds of the debtor …   Useful english dictionary

  • charging order — A statutorily created means for a creditor of a judgment debtor who is a partner of others to reach the debtor s beneficial interest in the partnership, without risking dissolution of the partnership. Uniform Partnership Act, No. 28 …   Black's law dictionary

  • order — or·der 1 n 1: a state of peace, freedom from unruly behavior, and respect for law and proper authority maintain law and order 2: an established mode or state of procedure a call to order 3 a: a mandate from a superior authority see also …   Law dictionary

  • Order of Attorneys of Brazil — Logo of the Order of Attorneys of Brazil Formation November 18, 1930 Type Legal Society Headquarters Brasília, Federal District …   Wikipedia

  • order# — order n 1 *association, society, club 2 *command, injunction, bidding, behest, mandate, dictate Analogous words: instruction, direction, charging or charge (see corresponding verbs at COMMAND) order vb …   New Dictionary of Synonyms

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