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Legislative updates

House Bill 3400, effective August 1, 2022, makes changes to the financing statement filing system in regards to unauthorized financing statements filed with the intent to harass or defraud the person named as the debtor. Among other things the bill provides a procedure whereby a person named as a debtor in a financing statement may file an affidavit with Secretary of State stating that the financing statement was unauthorized and filed with intent to harass or defraud and directing the Secretary of State to file a termination statement if the Secretary of State does not reject the affidavit.

House File 2764, effective January 1, 2019, amends provisions governing conversions of limited partnerships and partnerships and adds provisions for domestications of limited partnerships and partnerships.

Case summaries

Effect of Reinstatement
Design Innovations, LLC v. Lockhart, A23-0423, decided August 21, 2023. The Minnesota Court of Appeals affirmed the district court’s ruling that a Minnesota LLC had standing to bring its breach of contract action. The LLC had been administratively terminated by the Secretary of State for failing to pay a fee but the district court found that the LLC had represented that it cured the defect and paid the fee. With the fee paid the LLC was returned to active status as of the date of termination and had standing to sue.

Separate Existence of Affiliated LLCs
State v. Owens, A18-1800, decided May 20, 2019. The Minnesota Court of Appeals answered a certified question by stating that two wholly owned subsidiary LLCs of the same parent were separate entities and thus the transfer of cannabis oil from one subsidiary to the other was a transfer to another person and violated the law prohibiting transfers to another person.

Charging Order
Benzick v. Palm Properties LLC, A18-0956, decided March 25, 2019. The Minnesota Court of Appeals ruled the trial court abused its discretion in issuing a charging order that required LLCs to deliver all payments due to a debtor member to the creditor and not just distributions due.

Other notices

As a reminder, Minnesota enacted the Revised Uniform Limited Liability Company Act effective August 1, 2015. The old law remained in effect and continued to govern LLCs formed or registered before August 1, 2015 until January 1, 2018. On January 1, 2018 the old law is repealed, at which time the Revised Act will govern all LLCs. Read the notice from the Secretary of State.
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