The Wall Street Journal reports that Exxon-Mobil’s recent $31 billion purchase of natural gas exploration firm XTO Energy confirms a recovery of merger and acquisition activity over the past 2 months. It reports that November and December had the most M&A activity since the summer of 2008, with values 4 times greater than a year ago. Also leading this charge were Warren Buffet’s largest ever $26 billion investment in the railroad industry, and the $4.6 billion merger of Stanley Works and Black & Decker. November alone saw the announcement of 41 U.S. deals worth a combined total of approximately $47.5 billion, benefiting mostly large Wall Street banks and boutique financial firms. Sources within the chemical industry also expect a 2010 rally in the number of deals.

Many experts believe these increases in M&A activity signal good news for the health of the broader economy in 2010. Indeed, the recent surge seems to be the result of increased access to capital markets, the stagnation of which has been cited repeatedly as the cause of the continued lagging of a broader recovery. Accompanying these positive indicators are the apparent stabilizing of economies world-wide, financing becoming more available in the broader spectrum, and the narrowing of the gap in price expectations between buyers and sellers. Consistently, a large regional bank representative recently said at a lunch meeting that their bankers have been directed to increase lending dramatically in 2010 as underwriters loosen standards for loan approval.

Until recently, any positive indicators of recovery always have seemed to accompany at least as many negative ones. As 2009 ends, however, the negative indicators appear to be waning strongly in favor of the positive. Also, while many experts claim, perhaps too definitively, that this recession is over, others hinge their disagreement mostly on lagging unemployment data. Yet unemployment typically is the last area to improve after a recession as companies tend to wait until they clearly are understaffed before resuming hiring. Moreover, early 2010 should provide great opportunities for companies to contact their previously obstinate bankers again to seek (or refinance) lines of credit and other financing.

The Florida Supreme Court will shortly deliver its decision on the question certified to it by the Eleventh Circuit under FTC v. Olmstead, et al, 2008 US App LEXIS 11393 (May 29, 2008) as to whether creditors of single member Florida LLCs are limited to charging order remedies.

Ever since LLCs came into existence, legal and financial planners have taken advantage of the asset protection granted by the limited liability company acts (“LLC Acts”) limiting creditor remedies to charging orders. A charging order provides a creditor with a lien on the debtor’s distributional interest in the LLC. By denying the creditor the right to levy on the debtor’s membership interest and obtain voting rights, it limits their remedy to the amount of distributions (if any) made by the LLC.

The charging order remedy originated in common law to protect non-debtor partners from being unwittingly forced into partnership with a creditor. Nevada has extended this concept to certain small business corporations. See Nev. Rev. Stat. 78.746(1)(bb) and Nev. Rev. Stat.78.746. However, this justification does not exist in a single member LLC. Even though the LLC Acts do not limit charging order protections to multi-member LLCs, the plain language of the statutes is under attack in cases like Olmstead.

Charging order protections for single member LLCs were first overturned by the United States Bankruptcy Court for the District of Colorado in In re Ashley Albright, 2003 Bankr. Lexis 291. However, that case has not yet been followed by any state court interpreting its own LLC Act. The decision of the Florida Supreme Court in Olmsteadcould be the next domino to fall. It is time for planners to reassess whether single member LLCs meet their intended purpose and to what extent alternative asset protection plans can avoid judicially created creditor remedies.