Who Holds The Assets In A Delaware Series LLC? by Norman M. Powell, Esquire


According to records of the Delaware Secretary of State, more than 96,000 Delaware limited liability companies (“Delaware LLCs”) were formed in 2006. Delaware LLCs are increasingly the entity of choice for operating companies, and figure prominently in a great many structured finance transactions as so-called special purpose entities. The Delaware Limited Liability Company Act, 6 Del. C. § 18-101,

et seq. (the “Delaware LLC Act”) facilitates the formation of Delaware LLCs with attributes carefully crafted to meet the needs of a given application, and is regularly revised so as to best assure that Delaware LLCs can be crafted to meet the ever-developing needs of the marketplace. For a number of years, the Delaware LLC Act has permitted the formation of Delaware LLCs with separate series of members,

managers, and limited liability company interests.

In the legislative session ended June 30, Delaware’s General Assembly passed Senate Bill 96 (“SB 96”) amending the Delaware LLC Act. SB 96 was signed into law by Governor Minner, and took effect on August 1, 2007. Among other things, SB 96 provides a number of options for the holding of assets associated with a series. These options provide maximum flexibility, and so accommodate the needs of a great many constituencies. Inevitably, some options are better suited to some applications than others. This article considers the interplay between the Delaware LLC Act provisions relating to series and perfection of security interests by filing under Article 9 of the Uniform Commercial Code (“Article 9”).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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