Digital Ascension Group Unveils Comprehensive Review of State LLC Statutes Highlighting Vulnerabilities for Single-Member LLCs

Analysis of the limited liability company statute in every state finds nine allow a foreclosure buyer to obtain a sole member's entire interest and become the owner of the company

Dallas, Texas, Sept. 08, 2026 (GLOBE NEWSWIRE) -- A review of the limited liability company statute in all fifty states finds that nine states expressly allow a court to sell a sole member's entire ownership interest to a judgment creditor, who then becomes the owner of the company. This could lead to real exposure for those with significant assets.

Charging order protection is an important consideration for LLC formation

The nine are Arkansas, Florida, Idaho, Iowa, New Hampshire, Pennsylvania, Utah, Vermont and Wisconsin. In each of them, the same statute protects a company that has more than one member. The only variable is the number of members.

In most states, a creditor who forecloses on a membership interest receives the right to distributions and nothing else. The debtor remains the owner and the creditor cannot vote, manage or sell company assets. In the nine states identified, a separate subsection applies when the company has a single member. Under it, the purchaser at the sale takes the member's entire interest, becomes the member, and the original owner is dissociated.

"The assumption is that an LLC puts a wall between a personal judgment and the business," said Jake Claver. "In nine states that wall has a door in it, and the door is only there if you are the only member. People choose a state for its reputation. Very few read the subsection that decides this."

Claver has worked for years to discuss the benefits of establishing a LLC for crypto investments and has long touted the benefits of Wyoming for digital asset LLCs over other jurisdictions. The finding runs against a common assumption that a newer statute offers stronger protection. Seven of the nine carry the same four sentences word for word, drawn from the Revised Uniform Limited Liability Company Act, a model act published to modernize state LLC law: the court confirms the sale, the purchaser "obtains the member's entire interest, not only the member's transferable interest," the purchaser "thereby becomes a member," and the former owner "is dissociated as a member." Those seven are Arkansas, Idaho, Iowa, Pennsylvania, Utah, Vermont and Wisconsin. Florida and New Hampshire reach the same outcome through their own drafting rather than the model text.

Two states show the split plainly. Arkansas Code Section 4-38-503 requires a creditor to prove that members acted in bad faith or committed intentional misconduct before foreclosing against a multi-member company, and requires only a showing that distributions will not pay the debt within a reasonable time when the debtor is a sole member. New Hampshire Revised Statutes Section 304-C:126 places multi-member protection and single-member exposure in adjacent subparagraphs.

The review also found that 21 states bar foreclosure of a membership interest entirely. Nine of those name single-member companies in the statute itself: Alaska, Delaware, Kansas, Nevada, North Dakota, Oklahoma, South Dakota, Texas and Wyoming. Wyoming Statute Section 17-29-503 reserves the subsections where the model act places foreclosure, and names the sole member in its exclusive-remedy provision. Twelve more states permit foreclosure but limit the purchaser to economic rights, so no change of ownership occurs. Eight states grant a charging order and say nothing about exclusivity or foreclosure, leaving the question to case law.

State choice is only part of the picture. An operating agreement written for a single-member company can address what happens on a transfer of the member's interest, who may be admitted as a member, and how a successor takes control, none of which a standard formation filing covers. Firms that specialize in entity structuring, including Digital Ascension Group, draft those provisions specifically. No structure removes creditor exposure, and the outcome in any given case depends on the facts, the forum and the governing state law.

The charging order provision in all fifty states was read in full from official state codes and legislature sites, and is cited by section. Each was coded on whether the charging order is the exclusive remedy, whether foreclosure is permitted, and whether single-member companies are treated differently. The seven statutes sharing model wording were confirmed clause by clause against enacted text. Pattern matching was tried and rejected: it misread three states, because the sentence extending a section to single-member companies protects owners where that section bars foreclosure and exposes them where it allows foreclosure.

About Digital Ascension Group

DAG is a multi-family office focused on digital assets for High-Net-Worth and Ultra-High-Net-Worth individuals and Family Offices. Founded by Jake Claver and Max Avery, the firm provides comprehensive family office services including strategy, risk management, regulatory compliance and custody solutions. The firm bridges traditional financial practices with crypto and blockchain markets to help clients build and protect generational wealth in digital assets.

Press Inquiries

Jake Claver
info [at] jakeclaver.com
https://www.jakeclaver.com
5910 North Central Expressway
Suite 1450
Dallas, Texas 75206

A video accompanying this announcement is available here: https://youtube.com/watch?v=khgPsovhKdI