This program will provide you with a practical guide to the treatment of LLC interests when an LLC member becomes insolvent or files for bankruptcy.

A fundamental principle of partnership law – widely incorporated into LLC statues – is that you get to choose your own partner.  A partner or LLC member may assign his or her interest to a third-party but the assignee is only entitled to the assignor’s distributions, not his or her voting or substantive rights.  But in insolvency and bankruptcy everything gets more complicated.  Whether a creditor or trustee (holding the interest of the debtor) gets more than economic rights is a complicated question that’s resolved by reference to the nature of the underlying operating agreement and its language. This program will provide you with a practical guide to the treatment of LLC interests when an LLC member becomes insolvent or files for bankruptcy.
 
• Practical consequences when LLC or LLC member files for bankruptcy 
• Rights of creditor or trustee to economic and non-economic rights of insolvent LLC member
• Importance of language of underlying LLC operating agreement and whether it’s executory 
• Practical drafting tips that planners can take to mitigate adverse impact of member insolvency 
• Impact of an LLC becoming insolvent or filing for bankruptcy on its members
• Common traps when drafting the insolvency/bankruptcy provisions of LLC operating agreements

Speaker:
Allen Sparkman is a partner in the Houston, Fort Worth, and Denver offices of Sparkman Foote, LLP.  He has practiced law for over forty years in the areas of estate, tax, business, insurance, asset protection, and charitable giving.  He has written and lectured extensively on choice-of-entity, charitable giving and estate planning topics.  He is the Colorado reporter for the books "State Limited Partnership Laws" and "State Limited Liability Company Laws," both published by Aspen Law & Business and co-author of “Using Limited Liability Companies, Partnerships, and Limited Partnerships in Colorado,” publishing by CLE in Colorado, Inc.  Mr. Sparkman received his A.B. with honors from Princeton University and his J.D. with high honors from the University of Texas School of Law.