§ 45-10.2-53 — (508) Limitation on distribution

North Dakota § 45-10.2-53

• Jurisdiction: North Dakota
• Title 45: Partnerships
• Ch. 45-10.2: Uniform Limited Partnership Act

Text

1. A limited partnership may not make a distribution in violation of the partnership
agreement.
2. A limited partnership may not make a distribution if after the distribution:
a. The limited partnership would not be able to pay its debts as they become due in
the ordinary course of the activities of the limited partnership; or
b. The total assets of the limited partnership would be less than the sum of its total
liabilities plus the amount that would be needed, if the limited partnership were to
be dissolved, wound up, and terminated at the time of the distribution, to satisfy
the preferential rights upon dissolution, winding up, and termination of partners
whose preferential rights are superior to those of persons receiving the
distribution.
3. A limited partnership may base a determination that a distribution is not prohibited
under subsection 2 on financial statements prepared on the basis of accounting
practices and principles that are reasonable in the circumstances or on a fair valuation
or other method that is reasonable in the circumstances.
4. Except as otherwise provided in subsection 7, the effect of a distribution under
subsection 2 is measured:
a. In the case of distribution by purchase, redemption, or other acquisition of a
transferable interest in the limited partnership, as of the date money or other
property is transferred or debt incurred by the limited partnership; and
b. In all other cases, as of the date:
(1) The distribution is authorized, if the payment occurs within one hundred
twenty days after that date; or
(2) The payment is made, if payment occurs more than one hundred twenty
days after the distribution is authorized.
5. Indebtedness of a limited partnership to a partner incurred by reason of a distribution
made in accordance with this section is at parity with the indebtedness of the limited
partnership to its general, unsecured creditors.
6. Indebtedness of a limited partnership, including indebtedness issued in connection
with or as part of a distribution, is not considered a liability for purposes of
subsection 2 if the terms of the indebtedness provide that payment of principal and
interest are made only to the extent that a distribution could then be made to partners
under this section.
7. If 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 made.