The State on the Certificate.
August 2026
Ask a room of business owners where they formed their holding company and a good number will name a state they have never worked in, do not live in, and could not find a client in. Delaware. Wyoming. Nevada. The formation certificate is treated as a talisman — a way to buy one state’s creditor law and carry it home in an envelope.
On May 20, 2026, the North Carolina Court of Appeals explained, in a case worth more than half a billion dollars, why the envelope is empty. Universal Life Ins. Co. v. Lindberg, No. COA25-6 (N.C. Ct. App. filed May 20, 2026) (Carpenter, J.), appeal from Durham County Superior Court, No. 22CVS002507-310.
The dispute.
Universal Life Insurance Company holds a federal judgment against Greg E. Lindberg for $524,009,051.26, plus interest, entered on May 3, 2022 by the United States District Court for the Middle District of North Carolina on his breach of a guaranty of the obligations of one of his insurance companies. Universal Life Ins. Co. v. Lindberg, No. 1:20-cv-00681 (M.D.N.C.). Lindberg owned all of the outstanding membership rights in Global Growth Holdings, LLC, an entity organized under Delaware law, which had been converted from a corporation into an LLC in December 2023.
Universal Life moved in Durham County Superior Court for a charging order against Lindberg’s economic interest in Global. The trial court granted it on July 16, 2024. Lindberg appealed on two grounds, both jurisdictional in flavor: that North Carolina’s LLC Act does not authorize charging orders against foreign LLCs, and that the court lacked the jurisdiction necessary to charge an interest in a Delaware entity.
The Court of Appeals, in an opinion by Judge Carpenter, affirmed.
Point one: the statute already said “foreign.”
The first argument failed on the definitions, and it failed quickly.
North Carolina’s LLC Act permits a court, on application by a judgment creditor, to charge “the economic interest of an interest owner” with payment of the unsatisfied amount of the judgment with interest. N.C. Gen. Stat. § 57D-5-03(a). The Act then defines “limited liability company” to mean an LLC or a foreign LLC, and defines “foreign LLC” to include entities organized under the law of another state that are denominated limited liability companies there. N.C. Gen. Stat. § 57D-1-03(17), (13). Delaware qualifies. The charging-order provision therefore reaches interests in foreign LLCs by the Act’s own terms.
Lindberg’s reading required the court to insert a limitation the General Assembly had not written. It declined.
Point two: the order runs against the debtor, not the company.
The jurisdictional argument was the more interesting one, and the court’s answer is the sentence planners should carry away.
Lindberg’s premise was that charging his interest in a Delaware LLC required the North Carolina court to have jurisdiction over the Delaware LLC — that the court was, in effect, reaching into Delaware to act on a Delaware entity. The court rejected the premise. A charging order operates as a lien on the personal property of the judgment debtor — his economic interest — and not on the property of the LLC or on the LLC itself; a trial court therefore “does not need in rem or quasi in rem jurisdiction over the foreign LLC to issue a charging order.” Id. The order does not purport to govern how Global is managed, who may vote it, how it may admit members, or any other question of its internal affairs. Those remain Delaware’s business, and the order leaves them alone.
What the court needs, therefore, is personal jurisdiction over the interest owner. North Carolina had it: Lindberg contested in rem and quasi in rem jurisdiction in his omnibus response without disputing the trial court’s personal jurisdiction over him, which the Court of Appeals treated as a general appearance. The practical upshot follows directly from that framing. The membership interest is the debtor’s own property, charged by a court that has the debtor; the entity’s state of organization never enters the analysis.
That is the mechanism by which “imported protection” evaporates. A North Carolina resident does not become a Delaware litigant by filing a Delaware certificate. He remains a North Carolina resident, suable in North Carolina, whose intangible personal property is charged under North Carolina’s statute — a statute that, as it happens, says the charging order is a lien on the judgment debtor’s economic interest from the time it is served on the LLC. N.C. Gen. Stat. § 57D-5-03(b).
What Delaware law would have given him anyway.
It is worth noting what Lindberg was reaching for and what it would have been worth. Delaware’s LLC act contains a respectable charging-order provision; so does North Carolina’s. Under North Carolina’s, the creditor’s rights are genuinely limited — the creditor “only can receive the distributions that otherwise would be paid to the interest owner with respect to the economic interest,” without voting rights, management authority, or power to compel a distribution, and entry of a charging order is the exclusive remedy by which a judgment creditor of an interest owner may satisfy the judgment from the judgment debtor’s ownership interest. N.C. Gen. Stat. § 57D-5-03(a), (d).
In other words, the forum state’s own statute already gave Lindberg most of what the Delaware detour was supposed to buy. The argument was not really about substantive protection at all. It was about whether the entity’s formation state could be used to move the fight to a different rulebook — and the answer was no, because the charging order was never operating on the entity in the first place.
This is a general point about statute-shopping through the certificate of formation. The protective provisions that get advertised — exclusivity language, no-foreclosure rules, limits on what a charging order is — are provisions of the law that the enforcing court applies. A debtor gets the benefit of a favorable charging-order statute when a court applying that statute hears the case. Filing in a state does not, by itself, deliver its courts or its choice-of-law rules to a dispute between a resident debtor and a resident creditor.
The timing question the opinion did not need to reach.
One detail in the record is not part of the holding but deserves a planner’s attention. The federal judgment was entered in May 2022. The corporation was converted into an LLC in December 2023 — after judgment, while collection was under way.
The court decided this appeal on definitional and jurisdictional grounds and did not need to characterize that sequence, and we do not suggest it did; nothing here should be read as a finding about it. But the sequence itself is the shape that creditors’ counsel are trained to look for: a change in the form of an asset, undertaken after the claim has accrued and while litigation is live. Whatever its actual motivation, a restructuring on that timeline invites exactly the inquiry a client least wants — into intent, into whether anything of substance changed, into whether the transaction was a business decision or a response to a creditor.
Converting an entity does not season a structure. If anything, it resets the clock on the questions that matter, because it creates a fresh transaction on a date the creditor can point to. A structure that has been in its current form since long before the dispute has nothing to explain. One that changed form in the third year of the litigation has a great deal to explain, and will be asked to.
The planning read.
Three observations, offered generally:
The formation state is a governance choice, not a shield. Choose it for the reasons it is actually good for — settled corporate law, a competent chancery bench, predictable internal-affairs rules, and the convenience of counsel. Do not choose it in the belief that its creditor-remedy statute will follow the certificate home. The sensible default is to form where the owner is and where the business is actually conducted, and to seek protection from architecture rather than from a mailing address.
The charging order attaches to whoever owns the interest. That is the load-bearing sentence in Lindberg, and it cuts both ways. If the debtor personally owns the membership interest, a court with jurisdiction over the debtor can charge it — no matter where the company was formed. If the debtor does not own the interest — because it has been held for years by an irrevocable, discretionary trust under genuinely independent administration — there is nothing of the debtor’s for the order to attach to, and the analysis never reaches the entity at all.
Layering entities is not the same as separating ownership. Global’s Delaware charter added a step to the creditor’s argument. It did not add a wall. The step cost Universal Life an appeal; it did not cost them the interest.
Conclusion.
Lindberg is not a hard case, and its result should not be surprising. What makes it useful is how cleanly it isolates a widespread and expensive misconception. A great deal of money is spent every year on formation states selected for their creditor-remedy statutes, by owners who will never litigate in those states, against creditors who will never file there.
The court’s reasoning explains why that spending buys so little. The charging order was never aimed at Delaware. It was aimed at a man in North Carolina, and at a piece of intangible personal property that he still owned.
The question that decides these cases is not where the company was formed. It is whether, years before the claim arrived, the client stopped owning the thing the creditor is now trying to reach — and whether someone genuinely independent has been administering it ever since.
This note is general commentary for informational purposes and is not legal advice for any specific matter. Charging-order and choice-of-law questions vary materially by state and turn on the facts, the timing, and the forum.