Currently, Illinois is one of the eight states that allows for the formation of this unique type of limited liability company, known as a Series Limited Liability Company. A series limited liability company may hold separate sets of assets and separate lines of business in separate series, and each of these series should, although not significantly tested in the courts of law, be statutorily immune from claims against any other series.
The organization of series limited liability company in Illinois is authorized under the Limited Liability Company Act 805 ILCS 180/37-40. An Illinois series LLC is a single legal business entity that permits the partitioning of assets and liabilities among the various series. When all requirements are met, or unless otherwise provided for by the Act, the debts, liabilities and obligations incurred or contracted for, with respect to a particular series, shall be enforceable against the assets of that series only, and not against the assets of the entire limited liability company in general or any of the series within that limited liability company.
Series LLCs are often used by real estate companies, both management and investment, that own multiple properties throughout Illinois. Each real estate property is held in a different series in order to segregate the liabilities and insulate each series from the other series and the LLC in general. This limitation on liability is available if the following requirements are met:
- The LLC operating agreement must create one or more series;
- Separate and distinct LLC agreements and business records must be maintained for each series;
- The assets associated with a series must be held and accounted for separately form the other assets of the LLC or any other series;
- The operating agreement must provide for the separate accounting or assets and liabilities;
- Notice of the limitation on liabilities of a series must be set forth in the articles of organization of the LLC.
- A certificate of designation for each series must be filed with the Illinois secretary of State using Form LLC-37.40.