This text of Georgia § 14-11-407 (Restrictions on making distributions) is published on Counsel Stack Legal Research, covering Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
(a)No distribution to a member, to an assignee, or with respect to the interest of a member as to which an event of dissociation has occurred may be made 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 articles of organization or a written 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, if any, of other members upon dissolution that are superior to the rights of the member receiving the distribution.
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(a) No distribution to a member, to an assignee, or with respect to the interest of a member as to which an event of dissociation has occurred may be made 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 articles of organization or a written 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, if any, 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) of this Code section either 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) Except as provided in subsection (e) of this Code section, the effect of a distribution under subsection (a) of this Code section is measured: (1) In the case of distribution by purchase, redemption, or other acquisition of a limited liability company interest, as of the earlier of: (A) The date money or other property is transferred or debt incurred by the limited liability company; or (B) The date the member ceases to be a member with respect to the acquired limited liability company interest; (2) In the case of any other distribution of indebtedness, as of the date the indebtedness is distributed; and (3) In all other cases, as of: (A) The date the distribution is authorized if payment occurs within 120 days after the date of authorization; or (B) The date the payment is made if it occurs more than 120 days after the date of authorization. (d) A limited liability company's indebtedness incurred by reason of a distribution made in accordance with this Code section is at parity with the limited liability company's indebtedness to its general, unsecured creditors, except to the extent subordinated by agreement or except to the extent secured. (e) Indebtedness of a limited liability company, including indebtedness issued as a distribution, is not considered a liability for purposes of determinations made under subsection (a) of this Code section if its terms provide that payment of principal and interest is to be made only if, and to the extent that, payment of a distribution to members could then be made under this Code section, and if such indebtedness is issued as a distribution, each payment of principal or interest on the indebtedness is treated as a distribution, the effect of which is measured on the date the payment is actually made.