48-2c-611 - Distributions concerning a series.
48-2c-611. Distributions concerning a series.
(1) Subject to an operating agreement, at the time a member associated with a seriesbecomes entitled to receive a distribution with respect to the series, the member has the status of,and is entitled to all remedies available to, a creditor of the series with respect to the distribution.
(2) An operating agreement may provide for the establishment of a record date forallocations and distributions concerning a series.
(3) Notwithstanding Section 48-2c-1005, a limited liability company may make a limiteddistribution with respect to a series only.
(4) No distribution may be made by a company under this section with respect to a seriesif, after giving effect to the distribution:
(a) the series would not be able to pay its debts as they become due in the usual andregular course of its business; or
(b) the value of the series' total assets would be less than the sum of:
(i) its total liabilities; and
(ii) unless the articles of organization or the operating agreement permit otherwise, theamount that would be needed, if the series were to be dissolved and wound up at the time of thedistribution, to satisfy the preferential rights upon dissolution and winding up of members whosepreferential rights are superior to the rights of members receiving the distribution.
(5) The company may base a determination that a distribution is not prohibited underSubsection (4) either on:
(a) financial statements prepared on the basis of accounting practices and principles thatare reasonable in the circumstances; or
(b) a fair valuation or other method that is reasonable in the circumstances.
(6) For purposes of this section, amounts constituting reasonable compensation forpresent or past services or reasonable payments made in the ordinary course of business pursuantto a bona fide retirement plan or other benefits program do not constitute a distribution.
(7) A member who receives a distribution in violation of this section is liable to theseries for the amount of the distribution.
(8) Subject to Section 48-2c-1006, this section does not affect any obligation or liabilityof a member under an agreement or other applicable law for the amount of a distribution.
Enacted by Chapter 92, 2006 General Session