Creditor Can Collect Against PLLC Interest

A Norfolk Circuit Court says Va. Code § 13.1-1041.1 allows it to enter a charging order against a member of an accounting professional limited liability company on behalf of a creditor who is not a member of the PLLC.

Under the Virginia Code, a PLLC is defined as a limited liability company whose articles of organization set forth a sole and specific purpose permitted by the pertinent chapter. PLLCs are a subset of LLCs with specific limitations. The question becomes whether any of the unique rules regarding PLLCs affect the application of Va. Code § 13.1-1041.1 to a PLLC.

Defendant points to Code § 13.1-1115 as restricting the transfer of membership interests in a PLLC in ways that separate and distinguish a PLLC from an LLC in this regard. Defendant argues this makes sense in that the General Assembly desired no “outside” interference in the management and function of a PLLC by person not engaged in the specific profession. This argument is belied by Va. Code § 13.1-1038, § 13.1-1039.A and § 13.1-1041.1.

Also, defendant’s argument would afford to a member of a PLLC a special protection from creditors that has absolutely no rational basis under the statutory scheme creating PLLCs. It also would provide a nonsensical scenario under which a creditor who was a member of the same profession as the PLLC could utilize the provisions of § 13.1-1041.1, but a creditor who was not a member of that profession could not. The financial benefit provided to a creditor under § 13.1-1041.1 has no connection to such a distinction. The scenario advanced by defendant would induce such creditors to join league with a member of the particular profession in order to avail itself of § 13.1-1041.1, a machination that surely has no logical statutory purpose.

The court holds that the provisions of Va. Code § 13.1-1041.1 do apply to a PLLC and grants plaintiff’s motion for summary judgment.

Southern Bank and Trust Co. v. Joshi (Doyle) No. CL 14-5435, April 20, 2015; Norfolk Cir.Ct.; Megan E. Burns, John D. McIntyre for the parties. VLW 015-8-040, 3 pp.