It's just a hunch, but I am willing to bet the bank's lawyer in this case forgot to read the Illinois LLC Act, hence this opinion, In re Michael E. Lahood, 2009 Bankr. LEXIS 1832 (Bkrptcy. Ill. C.D. July 16, 2009).
Heartland Bank and Trust obtained a general lien on the personal property of the debtor. It didn't, however, obtain a charging order with respect to the debtor's distributional interest in an LLC. When it realized its mistake the bank tried a number of arguments to get its hands on the only asset with value in the debtor's estate.
First, it argued that the distributional interest in the LLC was subsumed in the general lien it had on the assets. That is, its broader more general lien included the LLC interest. The court said no, the legislature was very specific that the charging order was the exclusive remedy for an LLC distributional interest, the LLC interest was not a subpart of a general lien.
Then the bank argued that "exclusive" didn't really mean exclusive, but just one way to have a lien on an LLC distributional interest; its general lien was another (which sounds a lot like its first argument). Nope, said the court, if the bank didn't obtain a charging order it had nothing but air in terms of the LLC interest.
-Marc Ward
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