Single member LLCs cannot escape the authority of a bankruptcy trustee
Jan. 16, 2011The Dickinson Law Newsroom
Single member LLCs cannot escape the authority of a bankruptcy trustee

In re First Protection, Inc., 2010 WL 5059589 (9Th Cir. BAP [Ariz.] November 22, 2010) is another case involving the attempt by a single member of an LLC to prevent a bankruptcy trustee from exercising management rights over the LLC.  Debtors, David and Laura Fursman, transferred a 50% interest in Redux Development LLC to his mother after filing an individual Chapter 11 petition but before converting that petition a Chapter 7 case.  Their contention was that the trustee could not avoid the transfer under Section 549 of the Bankruptcy Code because the management rights of the LLC were not property of the estate.  In their view, only their membership interest, the right to profits and distributions, were transferred to the estate when they filed bankruptcy.  The trustee was a mere assignee and had no right to participate in management or control it.

The full version of this article is available online at Ward on Iowa Limited Liability Company Law.

share this page:
  • Facebook
  • LinkedIn
  • Twitter
  • Google Bookmarks
  • StumbleUpon
  • Digg
Categories: Business Law

Latest Articles

Dickinson’s 2015 Banking Calendar

January 28 at noon: Cybersecurity Webinar (Jeff Andersen, John Lande & Howard Hagen) March 12 […]

Longtime Dickinson attorney John Vernon retires

John K. Vernon retired from Dickinson, Mackaman, Tyler & Hagen, P.C., in Des Moines on […]

Dickinson Law named Tier 1 National “Best Law Firm” by U.S. News

U.S. News & World Report has released its 2015 “Best Law Firms” rankings, and Dickinson […]