Thursday, November 19, 2015

Series LLCs

By William E. Elwood

Series LLCs, the “new kid” in the array of entities now available for business and transactional structuring, present new tax, creditor and opinion issues. The concept of “series” entities was conceived in Delaware as a modification to that state’s business trust law to permit investment companies to issue securities in segregated pools of assets without needing to set up multiple separate entities requiring multiple registrations with the SEC. The concept has slowly caught on and spread to the LLC Acts of several states (not including Michigan) which now permit their LLCs to create what are, in effect, separate sub-LLCs. And, such separate sub-LLCs are coming to be used for a variety of non-mutual fund purposes raising significant questions, including whether such sub-LLCs are or should be taxed as separate entities, whether creditors of one sub-LLC can access the assets of another sub-LLC organized by the same parent LLC, and what legal opinions a law firm can give with respect to the interesting new business form.

For more information on series LLC contact Will Elwood in our Washington, D.C. office at 202-659-6972.