Uniform Protected Series Act
Caution State Law Variances!
SECTION 103. NATURE OF PROTECTED SERIES.
A protected series of a series limited liability company is a person distinct from:
(1) the company, subject to Sections 104(c), 501(1), and 502(d);
(2) another protected series of the company;
(3) a member of the company, whether or not the member is an associated member of the protected series;
(4) a protected-series transferee of a protected series of the company; and
(5) a transferee of a transferable interest of the company.
JayNote: Section 103 strives to tell us what a protected series is, and isn't. Whether section 103 accomplishes that task is a question best left to conjecture, since it is not at all difficult to envision somebody who is not familiar with the concept of a Series LLC using that section as a starting place and, after staring at it for 15 minutes, come away utterly baffled.
One the positive side, section 103 tells us that a protected series is a "person". This does not mean that a protected series will be coming over to anybody's house for beer and bar-b-que anytime soon, but instead is meant to affirm, as a matter of law, that a protected series is a juridical person entitled to all the rights, privileges and responsibilities of any other such "entity person" (such as corporations, partnerships and plain vanilla LLCs) under our laws. This could be quite important should a protected series attempt to file for bankruptcy protection independently from the series organization; or not, since as previously discussed nobody has a real inkling of how protected series might be treated in such a bankruptcy proceeding (and if one follows the "tranche of equity" description of a protected series, the thought that it could file for bankruptcy independently of the series organization makes utterly no sense whatsoever, but who knows, and in this regard section 103 might be viewed as authorizing the attempt).
Having told us that a protected series is a "person", section 103 then switches to the negative and goes on to tell us what a protected series is not: A protected series is not, and entirely distinct from, the series organization, any other protected series, a member of the series organization, and any transferee of an interest in either the protected series or the series obligation.
In other words, while the protected series is a component of the series organization, it is its own fellow. Well, sort of, since the Reporter's Comment states that " a protected series cannot exist on its own; therefore, a protected series is not entirely distinct from the series limited liability company on whose existence the protected series depends." Half bottle of aspirin, check, full bottle of scotch, check.
C O M M O N P A G E F O O T E R
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