Open Letter to Nevada State Senators to Amend NRS 21.090
Posted by: Mark Albright on Mon, Apr 15, 2013Share this post
As I read NRS Chapter 78 and NRS Chapter 86, the charging-order “benefit” to LLC members and to closely held corporations with fewer than 100 shareholders are essentially the same. The difference is that the exemption statute [NRS 21.090(1)(bb)] contains a specific reference to stock described in NRS 78.746(2) and does NOT mention LLC membership interests. The 2007 Nevada Legislature also amended NRS 21.090(aa), Nevada’s Exemption Statute, to make “stock of a corporation described in subsection 2 of NRS 78.746” exempt from execution.
This means, according to some legal experts, that “an individual who files bankruptcy may now claim that his small business stock is an exempt asset.” Stephen R. Harris, Northern Nevada Business Weekly, Sept. 6, 2010. The issue has not yet been adjudicated in Nevada Bankruptcy courts, but the reference in NRS Chapter 21 to stock ownership apparently creates a benefit in bankruptcy cases that is lacking for LLC owners. Hence there is some discussion among law firms to use corporations rather than LLCs, which was certainly not the legislative intent. I believe you should attempt to amend NRS 21.090 to include a reference to LLC interests. It should not take much to add a reference to LLC membership interests under NRS 86.401.
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