With the new NC limited liability company act becoming effective January 1, 2014, the General Assembly has clarified the rights of judgment creditors of an interest owner of an LLC. Pursuant to GS 57D-5-03, a judgment creditor of an interest owner in an LLC is simply entitled to “charge” the economic interest of the interest owner with payment of the unsatisfied amount of the judgment with interest. The judgment creditor only has the right to receive the distributions from the LLC that the interest owner would otherwise be entitled to receive. The charging order acts as a lien on the judgment debtor’s economic interest in the LLC from the time that the charging order is served upon the LLC. Priority is established by the order in which the charging orders were served.

Unfortunately for the judgment creditor, the act does not deprive any interest owner of a right, including any benefit of any exemption. The charging order does not act as an assignment of any of the interest owner’s rights or convey any rights to the judgment creditor other than the right of the judgment creditor to charge the economic interest of the interest owner.

The entry of a charging order is the exclusive remedy by which a judgment creditor of an interest owner may satisfy the judgment from or with the judgment debtor’s ownership interest.