Proper business organization requires a fundamental understanding of many converging factors: financial investment and profits, management structure and personal and entity liability. A relatively new type of business entity, the limited liability limited partnership, or LLLP, merges these to provide an option for businesses in certain sectors.
Distinguishing characteristics
A hybrid of other business entities, the LLLP most closely resembles the child of a limited partnership (LP) and limited liability partnership (LLP). The fundamental differences include:
- Partner Liability: In a limited partnership, a general partner who operates the business day-to-day assumes personal liability, while a limited partner, e.g. investor, does not. In an LLLP, both types of partners bear no personal liability for the business, including debt.
- Management: An LLLP must have at least one general manager; an LLP has no limited partners.
Are LLLPs legal in Illinois?
In Illinois, no enabling statute exists for LLLPs, but they are permitted under the Illinois Uniform Partnership Act.
Most common in the real estate industry, LLLPs provide liability protection for investors. In other words, they remain liable only for the amount of their investment.
They are also common in asset management companies and car dealerships.
Though relative new as a business structure, an LLLP can serve the needs of a specific entity. Depending upon the specific situation, a business in Illinois could use the structure to maximize its potential. Attorneys familiar with business law can offer guidance.
