(a) On application by a judgment creditor of a member of a limited liability company or a member’s transferee, a court having jurisdiction may order that the distributional interest of the judgment debtor be used to satisfy the judgment. The court may appoint a receiver to carry out the provisions of the charging order.
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Terms Used In Hawaii Revised Statutes 428-504

  • Distributional interest: means all of a member's interest in distributions by the limited liability company. See Hawaii Revised Statutes 428-101
  • Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Limited liability company: means a limited liability company organized under this chapter. See Hawaii Revised Statutes 428-101
  • Operating agreement: means the agreement under section 428-103 concerning the relations among the members, managers, and limited liability company. See Hawaii Revised Statutes 428-101
(b) A charging order constitutes a lien on the judgment debtor’s distributional interest. The court may order a foreclosure of a lien on a distributional interest subject to the charging order at any time. A purchaser at the foreclosure sale has the rights of a transferee.
(c) At any time before foreclosure, a distributional interest in a limited liability company which is charged may be redeemed:

(1) By the judgment debtor;
(2) With property other than the company’s property, by one or more of the other members; or
(3) With the company’s property, but only if permitted by the operating agreement.
(d) This chapter does not affect a member’s right under exemption laws with respect to the member’s distributional interest in a limited liability company.
(e) This section provides the exclusive remedy by which a judgment creditor of a member or a transferee may satisfy a judgment out of the judgment debtor’s distributional interest in a limited liability company.

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