Bank of America, N.A. v. Freed (2012)
Citation: 2012 IL App (1st) 110749 (Illinois Official Reports) · Court: Appellate Court of Illinois, First District, Second Division, Nos. 1-11-0749, 1-11-2112, 1-11-3372 (consolidated) (opinion by Justice Quinn; Presiding Justice Harris and Justice Connors concurring) · Filed: December 28, 2012. Text retrieved from the Illinois courts’ official PDF.
Facts
Bank of America foreclosed a USD 205 million construction loan on Chicago’s “Block 37,” guaranteed by developer Laurance Freed and DDL LLC, and obtained a judgment of about USD 206.7 million against the guarantors under a “carve-out” clause triggered by their contesting the foreclosure and the receiver appointment. In the post-judgment citation proceedings the bank moved under 805 ILCS 180/30-20 and 735 ILCS 5/2-1402 for charging orders. The trial court charged the guarantors’ interests in 46, then 26 more, LLCs and limited partnerships, ordered foreclosure of all the charging orders, and appointed a receiver over the interests. None of the 72 entities was joined as a party.
Holding
Affirmed on all issues, including that the 72 entities were not necessary parties: a court needs jurisdiction only over the judgment debtor to charge, and foreclose on, the debtor’s distributional or transferable interests (¶¶ 38–42). The court also upheld the carve-out judgment and the denial of a substitution of judge in the citation proceeding.
Reasoning
Under the LLC Act a charging order gives only the right to distributions, and if foreclosed “the purchaser would have only the rights of a transferee of distributional interests”; a member is not a co-owner of company property (805 ILCS 180/30-1(a)). The LLC therefore has no interest to protect. The same reasoning applied to limited partnerships under 805 ILCS 215/703. Requiring service on every entity would be “impractical and unnecessarily costly.”
Practical impact
- Buyers: a charging-order foreclosure sale of an Illinois LLC or LP interest conveys economic rights only — no membership, management or access to company assets. See illinois module 12.5 and equity-interests-stock-llc-charging-orders.
- Creditors: charging orders and their foreclosure can be obtained in the citation proceeding against the debtor without suing the entities.
Good-law status
Published opinion. The LLC Act’s charging-order section was amended after this decision (current text
cites P.A. 99-637, eff. 7-1-17), and still allows foreclosure “at any time” with the buyer obtaining
only the distributional interest. Subsequent treatment — needs_verification (citator not run).
Second verification pass (2026-10-16): citation, court, date, parties and holding re-checked against the opinion text at the source_url. No citator was available (CourtListener quota exhausted; a web search found no list of citing decisions) — citator not checked.
Applies in →
illinois · equity-interests-stock-llc-charging-orders · businesses-and-going-concerns
Disclaimer: This page is legal information, not legal advice. Verify the cited opinion and current law and consult a licensed Illinois attorney before acting. Last verified: 2026-10-18.