SB566: Bill Text

SB566,401,11 1. Participate in the management or conduct of the company's activities and affairs.

SB566,401,13 2. Except as otherwise provided in sub. (3) and s. 183.0410 (3), have access to records or other information concerning the company's activities and affairs.

SB566,401,15 (2) A transferee has the right to receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled.

SB566,401,18 (3) In a dissolution and winding up of a limited liability company, a transferee is entitled to an account of the company's transactions only from the date of dissolution.

SB566,401,22 (4) A transferable interest may be evidenced by a certificate of the interest issued by a limited liability company in a record, and, subject to this section, the interest represented by the certificate may be transferred by a transfer of the certificate.

SB566,401,24 (5) A limited liability company need not give effect to a transferee's rights under this section until the company knows or has notice of the transfer.

SB566,402,3 (6) A transfer of a transferable interest in violation of a restriction on transfer contained in the operating agreement is ineffective if the intended transferee knows or has notice of the restriction at the time of the intended transfer.

SB566,402,8 (7) Except as otherwise provided in s. 183.0602 (5) (b), if a member transfers a transferable interest and the transferee does not become a member with respect to the transferred interest, the transferor retains the rights of a member other than the interest in distributions transferred and retains all the duties and obligations of a member.

SB566,402,12 (8) If a member transfers a transferable interest to a person that becomes a member with respect to the transferred interest, the transferee is liable for the member's obligations under ss. 183.0403 and 183.0406 known to the transferee when the transferee becomes a member.

SB566,402,19 183.0503 Charging order. (1) On application by a judgment creditor of a member or transferee, a court may enter a charging order against the transferable interest of the judgment debtor for the unsatisfied amount of the judgment. Except as otherwise provided in sub. (6), a charging order constitutes a lien on a judgment debtor's transferable interest and requires the limited liability company to pay over to the person to which the charging order was issued any distribution that otherwise would be paid to the judgment debtor.

SB566,402,21 (2) To the extent necessary to effectuate the collection of distributions pursuant to a charging order in effect under sub. (1), the court may do any of the following:

SB566,402,23 (a) Appoint a receiver of the distributions subject to the charging order, with the power to make all inquiries the judgment debtor might have made.

SB566,402,24 (b) Make all other orders necessary to give effect to the charging order.

SB566,403,5 (3) Upon a showing that distributions under a charging order will not pay the judgment debt within a reasonable time, the court may foreclose the lien and order the sale of the transferable interest. Except as otherwise provided in sub. (6), the purchaser at the foreclosure sale obtains only the transferable interest, does not thereby become a member, and is subject to s. 183.0502.

SB566,403,9 (4) At any time before foreclosure under sub. (3), the member or transferee whose transferable interest is subject to a charging order under sub. (1) may extinguish the charging order by satisfying the judgment and filing a certified copy of the satisfaction with the court that issued the charging order.

SB566,403,13 (5) At any time before foreclosure under sub. (3), a limited liability company or one or more members whose transferable interests are not subject to the charging order may pay to the judgment creditor the full amount due under the judgment and thereby succeed to the rights of the judgment creditor, including the charging order.

SB566,403,15 (6) If a court orders foreclosure of a charging order lien against the sole member of a limited liability company, all of the following apply:

SB566,403,16 (a) The court shall confirm the sale.

SB566,403,18 (b) The purchaser at the sale obtains the member's entire interest, not only the member's transferable interest.

SB566,403,19 (c) The purchaser thereby becomes a member.

SB566,403,21 (d) The person whose interest was subject to the foreclosed charging order is dissociated as a member.

SB566,403,23 (7) This chapter does not deprive any member or transferee of the benefit of any exemption law applicable to the transferable interest of the member or transferee.

SB566,404,3 (8) This section provides the exclusive remedy by which a person seeking to enforce a judgment against a member or transferee may, in the capacity of judgment creditor, satisfy the judgment from the judgment debtor's transferable interest.

SB566,404,6 183.0504 Power of legal representative of deceased member. If a member dies, the deceased member's legal representative may exercise all of the following rights:

SB566,404,7 (1) The rights of a transferee provided in s. 183.0502 (3).

SB566,404,9 (2) For the purposes of settling the estate, the rights the deceased member had under s. 183.0410.

SB566,404,10 subchapter VI

SB566,404,11 DISSOCIATION

SB566,404,14 183.0601 Power to dissociate as member; wrongful dissociation. (1) A person has the power to dissociate as a member at any time, rightfully or wrongfully, by withdrawing as a member by express will under s. 183.0602 (1).

SB566,404,16 (2) A person's dissociation as a member is wrongful only if any of the following applies:

SB566,404,18 (a) The dissociation is in breach of an express provision of a written operating agreement.

SB566,404,20 (b) The dissociation occurs before completion of the winding up of the limited liability company and any of the following applies:

SB566,404,21 1. The person is expelled as a member by judicial order under s. 183.0602 (6).

SB566,404,22 2. The person is dissociated under s. 183.0602 (8).

SB566,405,2 (3) A person that wrongfully dissociates as a member is liable to the limited liability company and, subject to s. 183.0801, to the other members for damages caused by the dissociation. The liability is in addition to any debt, obligation, or other liability of the member to the company or the other members.

SB566,405,4 183.0602 Events causing dissociation. A person is dissociated as a member from a limited liability company when any of the following applies:

SB566,405,7 (1) The limited liability company knows or has notice of the person's express will to withdraw as a member, but, if the person has specified a withdrawal date later than the date the company knew or had notice, on that later date.

SB566,405,9 (2) An event stated in the operating agreement as causing the person's dissociation occurs.

SB566,405,11 (3) The person's entire interest is transferred in a foreclosure sale under s. 183.0503 (6).

SB566,405,12 (4) The person is expelled as a member pursuant to the operating agreement.

SB566,405,14 (5) The person is expelled as a member by the affirmative vote or consent of all the other members if any of the following applies:

SB566,405,16 (a) It is unlawful to carry on the limited liability company's activities and affairs with the person as a member.

SB566,405,19 (b) There has been a transfer of all the person's transferable interest in the company, other than a transfer for security purposes or the entry of a charging order that is in effect under s. 183.0503 and that has not been foreclosed.

SB566,405,20 (c) The person is an entity and all of the following apply:

SB566,405,25 1. The company notifies the person that it will be expelled as a member because the person has filed a statement of dissolution or the equivalent, the person has been administratively dissolved, the person's charter or the equivalent has been revoked, or the person's right to conduct business has been suspended by the jurisdiction of the person's governing law.

SB566,406,4 2. The statement of dissolution or the equivalent has not been withdrawn, rescinded, or revoked, or the person's charter or the equivalent or right to conduct business has not been reinstated, within 90 days after the notification under subd. 1.

SB566,406,6 (d) The person is an unincorporated entity that has been dissolved and whose activities and affairs are being wound up.

SB566,406,9 (6) On application by the limited liability company or a member in a direct action under s. 183.0801, the person is expelled as a member by judicial order because any of the following applies:

SB566,406,12 (a) The person has engaged, or is engaging, in wrongful conduct that has adversely and materially affected, or will adversely and materially affect, the company's activities and affairs.

SB566,406,15 (b) The person has willfully or persistently committed, or is willfully or persistently committing, a material breach of the operating agreement or the person's duties or obligations under s. 183.0409.

SB566,406,16 (7) In the case of an individual, any of the following applies:

SB566,406,17 (a) The individual dies.

SB566,406,19 (b) In a member-managed limited liability company, any of the following applies:

SB566,406,20 1. A guardian or general conservator for the individual is appointed.

SB566,406,23 2. A court orders that the individual has otherwise become incapable of performing the individual's duties as a member under this chapter or the operating agreement.

SB566,406,25 (8) In a member-managed limited liability company, any of the following applies:

SB566,407,1 (a) The person becomes a debtor in bankruptcy.

SB566,407,2 (b) The person signs an assignment for the benefit of creditors.

SB566,407,4 (c) The person seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of the person or of all or substantially all the person's property.

SB566,407,7 (9) In the case of a person that is a testamentary or living trust or is acting as a member by virtue of being a trustee of such a trust, the trust's entire transferable interest in the limited liability company is distributed.

SB566,407,10 (10) In the case of a person that is an estate or is acting as a member by virtue of being a personal representative of an estate, the estate's entire transferable interest in the limited liability company is distributed.

SB566,407,12 (11) In the case of a person that is not an individual, the existence of the person terminates.

SB566,407,13 (16) The limited liability company dissolves and completes winding up.

SB566,407,15 183.0603 Effect of dissociation. (1) If a person is dissociated as a member, all of the following apply:

SB566,407,17 (a) The person's right to participate as a member in the management and conduct of the limited liability company's activities and affairs terminates.

SB566,407,19 (b) The person's duties and obligations under s. 183.0409 as a member end with regard to matters arising and events occurring after the person's dissociation.

SB566,407,22 (c) Subject to s. 183.0504 and subch. X, any transferable interest owned by the person in the person's capacity as a member immediately before dissociation is owned by the person solely as a transferee.

SB566,408,2 (2) A person's dissociation as a member of a limited liability company does not of itself discharge the person from any debt, obligation, or other liability to the limited liability company or the other members which the person incurred while a member.

SB566,408,3 subchapter VII

SB566,408,4 DISSOLUTION AND WINDING UP

SB566,408,7 183.0701 Events causing dissolution. (1) A limited liability company is dissolved, and its activities and affairs must be wound up, upon the occurrence of any of the following:

SB566,408,9 (a) An event or circumstance that the operating agreement states causes dissolution.

SB566,408,10 (b) The affirmative vote or consent of all the members.

SB566,408,12 (c) The passage of 90 consecutive days during which the company has no members unless, before the end of the period, all of the following occur:

SB566,408,15 1. Consent to admit at least one specified person as a member is given by transferees owning the rights to receive a majority of distributions as transferees at the time the consent is to be effective.

SB566,408,16 2. At least one person becomes a member in accordance with the consent.

SB566,408,18 (d) On application by a member, the entry by a court of competent jurisdiction of an order dissolving the company on any of the following grounds:

SB566,408,20 1. That the conduct of all or substantially all the company's activities and affairs is unlawful.

SB566,408,22 2. That it is not reasonably practicable to carry on the company's activities and affairs in conformity with the articles of organization and the operating agreement.

SB566,408,24 3. That the managers or those members in control of the company have done any of the following:

SB566,408,25 a. Acted, or are acting or will act, in a manner that is illegal or fraudulent.

SB566,409,2 b. Acted, or are acting, in a manner that is oppressive and was, is, or will be directly harmful to the applicant.

SB566,409,5 (e) The department has given notice of administrative dissolution under s. 183.0708 (3) (b), unless the limited liability company is subsequently reinstated under s. 183.0709 or pursuant to judicial review under ss. 227.52 to 227.58.

SB566,409,7 (2) In a proceeding brought under sub. (1) (d) 3., the court may order a remedy other than dissolution.

SB566,409,11 183.0702 Winding up. (1) A dissolved limited liability company shall wind up its activities and affairs and, except as otherwise provided in s. 183.0703, the limited liability company continues after dissolution only for the purpose of winding up.

SB566,409,15 (2) (a) In winding up its activities and affairs, a limited liability company shall discharge the company's debts, obligations, and other liabilities, settle and close the company's activities and affairs, and marshal and distribute the assets of the company.

SB566,409,17 (b) In winding up its activities and affairs, a limited liability company may do any of the following:

SB566,409,19 1. Deliver to the department for filing a statement of dissolution stating the name of the company and that the company is dissolved.

SB566,409,21 2. Preserve the company activities, affairs, and property as a going concern for a reasonable time.