Series LLCs under the Delaware Limited Liability Company Act: An inexpensive means of effectively creating and operating multiple LLCs through one entity.

Our clients often operate their businesses through limited liability companies, and if the clients own multiple businesses they may create multiple LLCs in order to ensure the obligations of one business are not enforceable against the assets of another business. While creating multiple LLCs may be a wise means of protecting each company’s assets, it can also be an expensive proposition. For some time, however, the Delaware Limited Liability Company Act (the “Act”) has allowed the formation of one overarching LLC under which various divisions (called “series”) can be created. Per the Act, the assets of each series under the main LLC are protected from the debts and obligations of the other series, with each series allowed to (i) operate a separate business, and (ii) have different members.

Provisions of the Act relating to Series LLCs were recently amended, with Section 215(b) making clear that the assets of each series are protected as set forth above, so long as certain formalities are followed. For instance (1) a “notice of the limitation on liabilities of a series as referenced in this subsection [must be] … set forth in the certificate of formation of the limited liability company”, and (2) “the records maintained for any such series [must] account for the assets associated with such series separately from the other assets of the limited liability company.”

If you would like to know more about Delaware series LLCs please contact Stephen Goldstein at, or at (212) 586-5555.