Legal Question in Civil Litigation in Texas

liability of llc members
An LLC sells real property (its only asset) that it owns on 5-1-03. The LLC distributes all of the cash from the sale of the property to the members on 5-2-03 - the LLC now owns nothing. The LLC is sued on 11-1-03 by a former tenant of the property that was injured on the property the evening of 5-1-03(same day as sale). If the LLC is found liable, would the members be liable to return the money that was distributed to them?

Asked on 11/03/03, 3:26 pm

Joseph A. McDermott, III Attorney at Law

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Re: liability of llc members

Likely the plaintiff could set aside the transfers to the LLC members (thus requiring the members to return the cash) as a fraudulent transfer.

Answered on 11/03/03, 4:36 pm

Peter Bradie Bradie, Bradie & Bradie

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Re: liability of llc members

The members would have to return the money they received from the sale, if the LLC is found liable.

I'm surprised that insurance doesn't cover the claim. I'd be more surprised if there wasn't insurance coverage while the LLC owned the real property.

Answered on 11/03/03, 5:08 pm

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