§ 7-16-31. Restrictions on making distributions. (a) No distribution may be made to a member if, after giving effect to the distribution:
(1) The limited-liability company would not be able to pay its debts as they become 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 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 of other members upon dissolution that are superior to the rights of the member receiving the distribution.
(b) The limited-liability company may base a determination that a distribution is not prohibited under subsection (a) on:
(1) Financial statements prepared on the basis of accounting practices and principles that are reasonable under the circumstances; or
(2) A fair valuation or other method that is reasonable under the circumstances.
(c) The effect of a distribution under subsection (a) is measured as of:
(1) The date the distribution is authorized if the payment occurs within one hundred and twenty (120) days after the date of authorization; or
(2) The date payment is made if it occurs more than one hundred and twenty (120) days after the date of authorization.
History of Section. (P.L. 1992, ch. 280, § 1.)
Copyright ©2024 LegalFix. All rights reserved. LegalFix is not a law firm, is not licensed to practice law, and does not provide legal advice, services, or representation. The information on this website is an overview of the legal insurance products you can purchase—or that may be provided by your employer as an employee benefit or by your credit union or other membership group as a membership benefit.
LegalFix provides its members with access to legal services through a network of provider law firms. LegalFix, its corporate entity, and its officers, directors, employees, agents, and contractors do not provide legal advice, services, or representation—directly or indirectly.
The articles and information on the site are not legal advice and should not be relied upon—they are for information purposes only. You should become a LegalFix member to get legal services from one of our provider law firms.
You should not disclose confidential or potentially incriminating information to LegalFix—you should only communicate such information to your provider law firm.
The benefits and legal services described in the LegalFix legal plans are not always available in all states or with all plans. See the legal plan Benefit Overview and the more comprehensive legal plan contract during checkout for coverage details in your state.
Use of this website, the purchase of legal insurance products, and access to the LegalFix network of provider law firms are subject to the LegalFix Terms of Service and Privacy Policy.
