One Remedy, and No Other.

A judgment creditor named Robert Vaughn held a claim of $6.35 million against Isam Farhat — the product of a residential construction project in which, the court found, Farhat took more than a million dollars for a house he never finished, on the strength of a contractor’s licence he did not hold. To collect, Vaughn obtained charging orders against Farhat’s interests in four limited liability companies, two of them owned by Farhat alone, and asked the court to take the further step of selling those interests at a sheriff’s auction.

The court declined, and on appeal the decision was affirmed. In Vaughn v. Farhat, No. 0162-25-2 (Va. Ct. App. Apr. 21, 2026), the Court of Appeals of Virginia held that a creditor who charges a member’s interest receives “only the right to receive any distribution or distributions to which the judgment debtor would otherwise have been entitled,” and that the charging order is “the exclusive remedy” by which a judgment may be satisfied out of that interest. There would be no foreclosure and no forced sale — not even where the debtor was the sole member of the company.

The rule the court applied is often mistaken for a modern asset-protection invention. It is nothing of the kind. It is a creditor-limiting device inherited from a much older problem in the law of partnerships.

Consider two partners in business together. One incurs a personal debt — an accident, a divorce, a guarantee gone wrong — unrelated to the firm. Were that creditor free to seize and sell the debtor’s share, the innocent partner would find a stranger inside the business, voting and demanding the books. English law answered this in the Partnership Act of 1890 with the charging order: the creditor could charge the debtor’s interest and collect his share of profits as they were paid, but could neither seize the interest nor intrude upon the partnership. The United States imported the device in the Uniform Partnership Act of 1914, and in 1977 Wyoming enacted the first limited liability company statute in the country and carried it into the new form.

Wyoming has since become the device’s most vigilant guardian. Its statute (Wyo. Stat. § 17-29-503) makes the charging order the exclusive remedy against a member’s interest, forbids a court to order foreclosure of the interest or dissolution of the company, and — by the express words of the statute, not by inference — extends that protection to the single-member company.

The single-member question is not academic. In Olmstead v. FTC, 44 So.3d 76 (Fla. 2010), the Florida Supreme Court held that the charging-order limitation did not protect a sole member: with no innocent co-member to shield, it reasoned, the creditor could reach the interest directly. The decision sent a tremor through the field. Virginia had already closed that gap in 2006, when the General Assembly amended its LLC Act and deleted the language that had once allowed a court to foreclose on a charged interest.

That deletion decided Vaughn. The creditor argued, not unreasonably, that to refuse foreclosure would hand a debtor an “asset protection device” — he could park his wealth in a company, declare no distribution, and leave the creditor with an empty right. The court acknowledged the concern but held that it was bound by the words the legislature had chosen and could not rewrite the statute. A remedy the legislature has removed, it observed, “may not be revived by construction.” The charging order is, in Virginia, not the creditor’s first remedy but his only one.

The leading offshore jurisdictions did not invent the charging order. They studied the American statutes — Wyoming’s above all — and asked a sharper question: if the charging order is meant to be the creditor’s only remedy, how does one ensure the promise holds when a determined creditor tests it? Nevis, whose LLC ordinance dates to 1995, and Belize, whose International Limited Liability Companies Act followed in 2011, kept the Wyoming architecture and added what the domestic statutes leave out:

• A sunset. A Nevis charging order expires after three years and cannot be renewed; throughout, the member retains every incident of ownership as though no order existed.
• A toll at the door. Before bringing an action, a creditor must post security — in Belize, a deposit with the court of half the amount claimed or BZ$50,000, whichever is greater.
• A higher burden. A fraudulent transfer must be proved beyond a reasonable doubt— the criminal standard — rather than by the preponderance a United States court applies.
• No borrowed judgments. Only a judgment of a local court may be enforced against the company; a foreign judgment cannot simply be registered and executed.

Belize is, if anything, plainer than Virginia. Its statute says in terms that a member’s interest “may not be involuntarily sold, conveyed, transferred, foreclosed, charged or executed upon.” What the Vaughn court had to construe from the legislature’s silence, Belize wrote on the face of the Act.

Three points endure. The protection is real, and it is being enforced — here against a sympathetic creditor holding a large, fraud-based judgment. Courts are reading these statutes as they are written.

The protection also lives or dies on the precise words of the governing statute. Virginia’s strength came from a single deliberate deletion in 2006; a jurisdiction that never closed the gap, or that leaves the single-member case to a judge’s inference, offers weaker ground.

And the jurisdiction matters more than the label. “Charging-order-only” is a floor, not a ceiling. The questions that actually decide a contest are whether single-member entities are protected by statute, whether the order sunsets, whether a foreign judgment can be registered, and what a creditor must prove and post before the matter begins. On those questions Wyoming set the domestic standard, and Nevis and Belize — two of the jurisdictions in which the firm works — extended it.

The charging order is, in the end, a long answer to a short question: whether one member’s private creditor may disrupt a business he never built. Virginia has answered, once more, that he may not.