The Series LLC is a relatively new form of business entity in Texas. It was added to the Texas Business Organizations Code in 2009. Because the Series LLC is new, many attorneys and bank officers are unfamiliar with the opportunity and risks a Series LLC presents.
A “Series LLC” is literally different constituent “Series” within the structure of a single LLC. The Series LLC itself is the “Parent”, which is formed by filing a certificate of formation. After the Parent is formed, members of the Parent can create the individual Series with no additional public filing. Instead, the individual Series can be automatically created under the operating agreement when a new asset is purchased.
Each Series is treated as a separate legal entity with its own assets and liabilities. Accordingly, it functions in the same manner as a number of traditional, single asset LLCs created by the same members. Individual Series may separately enter into contracts, buy and sell property, borrow money, and do anything else a traditional LLC can do. Most importantly for lenders, creditors of one Series may not reach the assets of any other Series or the Parent. Series LLCs often take advantage of their structure by making the Parent a shell management company with no assets.