Collection against a limited liability company (LLC) in Florida has just become a little easier thanks to the revised statutes governing LLCs. Starting January 1, 2014, distribution to LLC members cannot be made if the result would be to leave the LLC insolvent and therefore, unable to pay its creditors. This allows creditors to be paid before the members may receive any distribution from the company and hopes to prevent distributions being made followed by dissolution of the LLC.
Further, if such distributions are made, then the members of the LLC will be personally liable for the amount of the distribution. This creates another level of protection for the creditor. Now, a creditor may seek to set aside a distribution made that makes the company insolvent under Florida Statutes Sec. 605.0406 as well as a fraudulent transfer.
Some other changes include the removal of “managing member” from the revised act’s definitions. This was done to eliminate the confusion created by the requirement to designate a managing member. Now, it will be assumed that all members retain statutory authority to bind the LLC unless specifically designated in an operating agreement or other document that a managing member shall solely have that authority. This will also help alleviate creditors’s issues as to whom actually binds the LLC. Hopefully these new changes will help creditors to better collect on the debts due to them by an LLC.