Nevis LLC Charging Order Protection
Section 43 of the Nevis Limited Liability Company Ordinance makes the charging order the sole and exclusive remedy available to a judgment creditor seeking to reach a member’s interest in a Nevis LLC. The creditor receives a lien on distributions that would otherwise go to the debtor-member.
The creditor gets nothing else: no ownership rights, no voting rights, no management authority, and no ability to force the LLC to make distributions or liquidate its assets.
Nevis applies this protection to both single-member and multi-member LLCs. Most U.S. states either deny charging order protection to single-member LLCs or have not addressed the question, creating a vulnerability that Nevis eliminates by statute.
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How the Charging Order Works
A charging order is a court-issued lien that redirects LLC distributions from the debtor-member to the judgment creditor. The creditor stands in the member’s shoes for distribution purposes only. If the LLC distributes $50,000 to its members, the creditor receives the debtor-member’s share. If the LLC retains its earnings and distributes nothing, the creditor receives nothing.
The creditor cannot compel the LLC to make distributions. The creditor cannot vote on LLC matters, attend meetings, inspect books, or participate in management decisions. The creditor cannot foreclose on the membership interest. The creditor cannot engage in reverse veil-piercing to reach the LLC’s underlying assets.
The practical effect is that the LLC’s manager controls whether the creditor ever sees any money. If the LLC holds its earnings in trust-owned accounts, makes no distributions, and waits, the creditor’s remedy is worth nothing.
The Three-Year Sunset
Nevis law imposes a time limit that no U.S. jurisdiction matches. Under the 2015 amendments to the NLLCO, a charging order expires after three years and cannot be renewed. The creditor’s window to receive distributions through the charging order is finite. Once the three years pass, the charging order dissolves automatically.
During those three years, the debtor retains all rights of membership as if the charging order did not exist. The debtor can continue to manage the LLC (if the debtor is also the manager), vote on LLC matters, and participate in all decisions about the entity’s operations and investments.
The Cook Islands also provides charging order protection for its LLCs, but with a five-year duration. Nevis’s three-year sunset is one reason practitioners prefer Nevis for standalone LLC structures not wrapped inside a trust.
The $100,000 Bond Requirement
Before filing any action against a Nevis LLC member or the LLC’s property, a creditor must post a bond of EC $100,000 (approximately $37,000 USD) with a Nevis financial institution. The bond secures the LLC’s legal costs if the creditor loses.
This requirement applies before the creditor can even begin the process of obtaining a charging order. Combined with the non-recognition of foreign judgments, the bond means the creditor must commit real money before taking the first procedural step in Nevis. For creditors pursuing moderate-sized judgments, the bond alone can make collection uneconomical.
The Domestic Enforcement Problem
The charging order protection described above operates under Nevis law in Nevis courts. The unsettled question is whether a U.S. court can bypass Nevis entirely and issue its own charging order against the membership interest.
Several U.S. courts have held that a creditor can obtain a charging order against a debtor’s interest in a foreign LLC through domestic proceedings. The reasoning is that the membership interest is personal property of the debtor, and personal property follows the debtor’s domicile. Under this analysis, the creditor obtains a domestic charging order and applies the forum state’s LLC law, not Nevis law.
If the forum state allows foreclosure of LLC interests (as some do for single-member LLCs), the creditor may gain more rights than Nevis law would permit. The Nevis three-year sunset, the exclusive-remedy limitation, and the bond requirement are all irrelevant if the U.S. court applies its own state’s law.
Other courts have reached the opposite conclusion, holding that enforcement against a foreign LLC must occur where the LLC is registered. The law on this point varies by state and by court, and no appellate consensus has emerged.
The domestic enforcement vulnerability is the primary reason that a standalone Nevis LLC is weaker than a Nevis LLC owned by an offshore trust. When a Cook Islands trust or Nevis trust owns 100% of the LLC, the debtor no longer holds a membership interest that a U.S. court can characterize as domestic personal property. The trust, not the debtor, is the member. The debtor is a beneficiary of the trust, and the trust’s spendthrift provision prevents creditors from reaching the beneficial interest.
Comparison to Domestic Charging Order Protection
| Feature | Nevis LLC | Florida Multi-Member LLC | Wyoming LLC |
|---|---|---|---|
| Charging order exclusive remedy | Yes (statutory) | Yes (statutory) | Yes (statutory) |
| Single-member protection | Yes (statutory) | No | Yes (statutory) |
| Duration | 3 years, non-renewable | Indefinite | Indefinite |
| Bond requirement | EC $100,000 (~$37,000 USD) | None | None |
| Foreign judgment recognition | No | N/A (domestic) | N/A (domestic) |
| Foreclosure permitted | No | Court discretion | No (statutory) |
| Reverse veil-piercing | Prohibited by statute | Permitted in some cases | Limited case law |
| Fraudulent transfer standard | Beyond reasonable doubt | Preponderance of evidence | Preponderance of evidence |
Florida’s multi-member LLC charging order protection is strong within the domestic system, but it offers no protection to single-member LLC owners. Wyoming protects single-member LLCs by statute and prohibits foreclosure, making it the strongest domestic jurisdiction. Nevis adds jurisdictional separation, the three-year sunset, the bond requirement, and the beyond-reasonable-doubt standard for fraudulent transfer claims.
When Charging Order Protection Alone Is Sufficient
Nevis LLC charging order protection is most effective for individuals with moderate asset levels ($200,000 to $500,000 in non-exempt liquid assets) and moderate litigation risk. The LLC costs less to establish and maintain than a full offshore trust, and the charging order protection is meaningful enough to deter most creditors from pursuing collection.
Above $500,000 in non-exempt liquid assets or with serious litigation risk, the domestic enforcement vulnerability makes a standalone Nevis LLC insufficient. The stronger structure pairs the LLC with an offshore trust that owns the membership interest, eliminating the domestic enforcement problem entirely. The Nevis LLC and trust structure or a Cook Islands trust owning the Nevis LLC are the two most common configurations.
