Series trusts, limited partnerships and limited liability companies have been a feature of certain business sectors for years. The series concept originated in the mutual fund and captive insurance industries in an effort to reduce administrative burdens and achieve cost savings, but has since expanded into other areas, most notably finance. However, uncertainties in regard to the treatment of series under various legal regimes, including commercial law, bankruptcy, tax and litigation, have discouraged their widespread acceptance. In an effort to advance their use, the Uniform Law Commission in 2017 promulgated a model Uniform Protected Series Act for LLCs. While that Act addresses some issues regarding series LLCs, unfortunately questions remained, including as to the interaction between series LLCs and UCC Article 9. More recent strides in the form of 2019 amendments to the Delaware LLC Act and the Delaware Uniform Commercial Code and, just this past April, a draft commentary issued by the UCC Permanent Editorial Board, may finally bring some needed clarity to this area for practitioners.

Series LLCs

A series LLC has been described as cell or sub-unit of an LLC to which certain assets and liabilities of such LLC have been allocated. A series is not a subsidiary of the LLC but instead exists within it. In general, as a matter of statute, a series can have its own members and managers and can conduct its own business activities under a separate name. The primary appeal of this structure lies in its ability to shelter the assets of a series from claims of creditors of other series of the same LLC or of the LLC generally.