A Limited Liability Company (LLC) allows business owners to achieve limited liability for debts of the business while being taxed on a relatively unrestricted pass-through basis. LLC property and LLC interests themselves usually cannot be directly seized or attached by creditors of debtor members. The creditors are limited to a “charging order” issued by a court requiring the LLC to divert payments from the debtor member to the creditor.
Corporations and/or individuals who own and operate more than one business or multiple properties often title their investments under a single LLC. A primary problem with single ownership of multiple businesses or property is that any legal liability relating to one business or property jeopardizes all other assets. Thus, most individuals who own many related businesses and properties separate ownership into single limited liability companies (LLC) for each asset so that lawsuits against one business or one property will not jeopardize the other assets. Multiple entity ownership like this can become complicated and expensive over time, especially as more business or properties in their own LLCs are added.
The Delaware LLC Act was amended in 1996 to allow an individual to create a separate “series” within an LLC where the debts and liabilities are enforceable against that series alone and not against the rest of the assets within the LLC. Thus, a single limited liability company can own multiple subsidiary limited liability companies each of which owns a single-asset business. Each unit of a Series LLC owns distinct assets, incurs separate liabilities, and can have different managers as well as members.