Pub. 8 2013-2014 Issue 6

March | April 2014 13 Extraordinary Service for Extraordinary Members. Blue Cross and Blue Shield of Nebraska is an Independent Licensee of the Blue Cross and Blue Shield Association. nebraskablue.com for the road ahead. Count on us Drew Sova concentrates his practice on advising borrowers and lenders of financial and regulatory matters in the completion of commercial transactions, and provides support to Husch Blackwell’s Banking and Finance Practice Specialty Center. You may contact Sova at (402) 964-5028 or drew.sova@huschblackwell. com. Knowing the limited rights an LLC membership interest as collateral conveys, creditors should consider additional avenues to potentially expand the “transferable interest” beyond its statutory definition. When negotiating a debtor’s membership interest, the creditor may request review of the LLC’s organizational documents. These documents can provide insight into the LLC’s rules regarding admission of new members, how the LLC makes distributions, and the LLC’s control andmanagement structure. (Creditors must be aware when reviewing the LLC’s operating agreement that if they discover any restrictions on a member transferring its transferable interest, this qualifies as “notice” and renders the debtor’s potential transfer ineffective. 9 ) In addition, a creditor may negotiate with the debtor member to enter into a voting agreement, whereby foreclosure upon the “transferable inter- est” conveys the debtor’s voting right in the LLC along with any LLC distributions. Conversely, the non-debtor members may view the prospect of having a member without economic incentives as a burden on the LLC. The non-debtor members may be willing to enter into a Put Option Agreement 10 with the creditor, whereby if the creditor seizes the transferable interest, the non-debtor members will purchase such interest at a previously agreed price. When contemplating an LLC membership interest as col- lateral, a creditor needs to be mindful of its narrow recourse ability. As discussed, this type of collateral secures nothing more than the debtor member’s right to distributions via the “transferable interest.” In addition, the charging order statute under the Act provides little ambiguity to potentially secure economic and management rights in an LLC membership interest. To add protection to this formof collateral, a creditor must be prepared from the outset to negotiate for rights be- yond the “transferable interest” with the debtor and/or LLC.  1. Neb. Rev. Stat § 21-102 2. Olmstead v. Federal Trade Commission, 44 So. 3d 76 (Fla. 2010) 3. Louis T. M. Conti, The New Olmstead Patch Legislation, THE FLORIDA BAR JOUR- NAL, Dec. 2011, at 49. 4. F.S. § 608.433(5) 5. F.S. § 608.433(6) 6. F.S. § 608.433(7) 7. Neb. Rev. Stat § 21-142 8. Neb. Rev. Stat § 21-142 9. Neb. Rev. Stat § 21-141 10. An option contract giving the owner (creditor) the right, but not the obligation, to sell its security at a predetermined price within a specified timeframe.  COUNSELOR’S CORNER — continued