Section 347.109

Title XXIII CORPORATIONS, ASSOCIATIONS AND PARTNERSHIPS

Chapter 347

Effective - 24 Jun 1997, see footnote   

  347.109.  Limitations upon distributions — date of measurement of effective distributions — wrongful distribution, liability, contribution. — 1.  A limited liability company shall not make any distribution to one or more members with respect to their interests in the limited liability company, and no member shall be entitled to receive any such distribution, to the extent that, after giving effect to the distribution:

  (1)  The limited liability company would not be able to pay its debts as they became due in the usual course of business; or

  (2)  The limited liability company's total assets would be less than the sum of its total liabilities to which such assets are subject plus, unless the operating agreement provides otherwise, the amount that would be needed, if the limited liability company were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of members whose rights to receive distributions are superior under the operating agreement to the rights of the members receiving the distribution, except that, for purposes of making such determination, liabilities to members or former members in their status as such shall be excluded.

  2.  The limited liability company may base a determination that its distribution is not prohibited under subsection 1 of this section on:

  (1)  Financial statements prepared on the basis of generally accepted accounting principles and practices that are reasonable under the circumstances; or

  (2)  A fair valuation or other method that is reasonable under the circumstances.

  3.  The effective distribution under subsection 1 of this section is measured as of:

  (1)  The date the distribution is authorized, if the distribution in fact occurs within one hundred twenty days after the date of authorization; or

  (2)  The date the payment is made, if it occurs more than one hundred twenty days after the date of authorization.

  4.  If a member shall receive any distribution with respect to his interest in a limited liability company in violation of this section or the operating agreement, such member and the person or persons who are vested with authority under the operating agreement to make distributions to the members and who knowingly authorized or permitted such distribution to the member shall be liable, for a period of three years following the date of the distribution, to the limited liability company for the value of the wrongful distribution, but only to the extent necessary to discharge the limited liability company's liabilities incurred prior to the date of such distribution.  If more than one such person who authorized or permitted such wrongful distribution is held liable therefor pursuant to this subsection, each such person shall be entitled to contribution from the other persons who are held so liable therefor pursuant to this subsection.

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(L. 1993 S.B. 66 & 20 § 359.765, A.L. 1997 H.B. 655 merged with S.B. 170)

Effective 6-24-97 (H.B. 655); 5-20-97 (S.B. 170)