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Series LLCs – The Future of Business Structuring?

There is more and more buzz growing in the legal industry these days surrounding a new variation on an established type of business structure, which is referred to as the “series” LLC. Essentially, the series LLC operates as an umbrella entity that has the ability to partition its assets and liabilities among various “series” within the same LLC.  Its main advantages are reduced organizational expenses and reduced administrative burdens. Delaware and several other states have adopted the series LLC structure, with still more considering series LLC legislation. Sophisticated business leaders and their advisers who have heard and read a lot about the new series LLC structure as implemented in other states may be considering utilizing the structure for their businesses here in Indiana. Would this be a sound business practice?

Maybe not. Before attempting to use the series LLC, there are real risks any company should consider. Indiana law does not currently permit the formation of series LLCs within the state. While it is possible to organize a series LLC in another state and qualify it to do business in Indiana, without specific legislative guidance on the topic, it is possible Indiana courts would not respect the liability protection and the shields between separate series.  Additionally, given Indiana’s $90 initial filing fee and biennial report filing fees of about $30, saving a few dollars on formation of an Indiana LLC may not warrant the risk that the liability shields would not be respected. The excitement surrounding the use of series LLCs is likely to increase as more states adopt series LLC statutes, more caselaw is formed, and more guidance on their tax treatment is released.

As always, when considering how you might structure your business, please contact the Corporate and Transactional Practice Group attorneys at Bingham McHale.

To learn more about Jeremy Hill and his practice, visit his profile.

  • Partner

    Jeremy is a member of the Business Services department, and he focuses his practice in the area of emerging business and financial institutions. Clients turn to him for a range of legal services, especially mergers and acquisitions ...

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