§ 7-16-31 - Restrictions on making distributions.
SECTION 7-16-31
§ 7-16-31 Restrictions on makingdistributions. – (a) No distribution may be made to a member if, after giving effect to thedistribution:
(1) The limited liability company would not be able to payits debts as they become due in the usual course of business; or
(2) The limited liability company's total assets would beless than the sum of its total liabilities plus, unless the operating agreementprovides otherwise, the amount that would be needed, if the limited liabilitycompany were to be dissolved at the time of the distribution, to satisfy thepreferential rights of other members upon dissolution which are superior to therights of the member receiving the distribution.
(b) The limited liability company may base a determinationthat a distribution is not prohibited under subsection (a) on:
(1) Financial statements prepared on the basis of accountingpractices and principles that are reasonable under the circumstances; or
(2) A fair valuation or other method that is reasonable underthe circumstances.
(c) The effect of a distribution under subsection (a) ismeasured as of:
(1) The date the distribution is authorized if the paymentoccurs within one hundred and twenty (120) days after the date ofauthorization; or
(2) The date payment is made if it occurs more than onehundred and twenty (120) days after the date of authorization.