Series LLCs and Protected Series

Scope of the chapter. A series LLC is a single limited liability company whose operating agreement divides its members, managers, interests or assets into designated groups, each called a series. Where the governing statute so provides and its conditions are met, the debts of each series may be enforced only against the assets of that series, and the debts of the company and of the other series may not be enforced against them. The device allows a sponsor to hold many assets or conduct many activities in one entity while segregating the liabilities of each. This chapter examines the Delaware provisions that created the device and the protected and registered series they now recognize, the 2026 amendments, the statutes of other leading states, the Uniform Protected Series Act, the recognition of series outside the formation state and in bankruptcy, the tax treatment of series, and the practical uses and risks of the form. It closes with a maintenance checklist.

The central difficulty. Every series statute rests on the same premise: a court will respect a division of liability inside one legal person because the statute of the formation state says it should. Inside the formation state, the premise holds. Outside it, the question is open in many settings. A creditor of one series may sue in a state without a series statute; a series may hold real property in such a state; a bankruptcy court may be asked to treat a series as a debtor or to consolidate it with its company. The practitioner who uses a series LLC must therefore assess two separate risks: the risk that the conditions of the formation statute have not been met, and the risk that a court outside the formation state will decline to give the internal shield the effect the statute intends. Most of this chapter addresses one or the other.

Organization. The chapter proceeds in nine parts:

1. the origins of the series and the three kinds of series now recognized (¶ 1010);
2. the Delaware protected series (¶ 1020);
3. the Delaware registered series (¶ 1030);
4. the 2026 amendments and series that are neither protected nor registered (¶ 1040);
5. the series statutes of other leading states (¶ 1050);
6. the Uniform Protected Series Act (¶ 1060);
7. recognition outside the formation state and in bankruptcy (¶ 1070);
8. taxation (¶ 1080); and
9. uses, risks and a maintenance checklist (¶ 1090).