§ 21-134 — Limitations on distribution

(RULLCA 405) (a) A limited
liability company may not make a distribution if after the distribution:
(1) the company would
not be able to pay its debts as they become due in the ordinary course of
the company's activities; or
(2) the company's total assets would be less than
the sum of its total liabilities plus the amount that would be needed, if
the company 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 members whose preferential rights are superior to those
of persons receiving the distribution.
(b) A limited liability company may base a determination
that a distribution is not prohibited under subsection (a) of this section
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 under the circumstances.
(c) Except as otherwise
provided in subsection (f) of this section, the effect of a distribution under
subsection (a) of this section is measured:
(1) in the case of a distribution by purchase, redemption,
or other acquisition of a transferable interest in the company, as of the
date money or other property is transferred or debt incurred by the company;
and
(2)
in all other cases, as of the date:
(A) the distribution is authorized, if the payment
occurs within one hundred twenty days after that date; or
(B) the payment is made,
if the payment occurs more than one hundred twenty days after the distribution
is authorized.
(d)
A limited liability company's indebtedness to a member incurred by reason
of a distribution made in accordance with this section is at parity with the
company's indebtedness to its general, unsecured creditors.
(e) A limited liability
company's indebtedness, including indebtedness issued in connection with or
as part of a distribution, is not a liability for purposes of subsection (a)
of this section if the terms of the indebtedness provide that payment of principal
and interest are made only to the extent that a distribution could be made
to members under this section.
(f) 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.
(g) In subsection (a)
of this section, distribution does not include amounts constituting reasonable
compensation for present or past services or reasonable payments made in the
ordinary course of business under a bona fide retirement plan or other benefits
program.

Legislative History

Source: Laws 2010, LB888, § 34.