1. Except as otherwise provided in subsection 2, a distribution from a limited-liability company must not be made if, after giving it effect:
(a)The company would not be able to pay its debts as they become due in the usual course of business; or
(b)Except as otherwise specifically permitted by the articles of organization, the total assets of the company would be less than the sum of its total liabilities.
2. A distribution from a series of the company must not be made if, after giving it effect:
(a)The company would not be able to pay the debts of the series from assets of the series as debts of the series become due in the usual course of business; or
(b)Except as otherwise specifically permitted by the articles of organization, the total assets of the series would be less than the
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1. Except as otherwise provided in subsection 2, a distribution from a limited-liability company must not be made if, after giving it effect:
(a) The company would not be able to pay its debts as they become due in the usual course of business; or
(b) Except as otherwise specifically permitted by the articles of organization, the total assets of the company would be less than the sum of its total liabilities.
2. A distribution from a series of the company must not be made if, after giving it effect:
(a) The company would not be able to pay the debts of the series from assets of the series as debts of the series become due in the usual course of business; or
(b) Except as otherwise specifically permitted by the articles of organization, the total assets of the series would be less than the sum of the total liabilities of the series.
3. The manager or managers or, if management of the company is not vested in a manager or managers, the members, may base a determination that a distribution is not prohibited pursuant to this section on:
(a) Financial statements prepared on the basis of accounting practices that are reasonable in the circumstances;
(b) A fair valuation, including unrealized appreciation and depreciation; or
(c) Any other method that is reasonable in the circumstances.
4. The effect of a distribution pursuant to this section must be measured:
(a) In the case of a distribution by purchase, redemption or other acquisition by the company of member’s interests, as of the earlier of:
(1) The date on which money or other property is transferred or debt incurred by the company; or
(2) The date on which the member ceases to be a member with respect to his or her acquired interest.
(b) In the case of any other distribution of indebtedness, as of the date on which the indebtedness is distributed.
(c) In all other cases, as of:
(1) The date on which the distribution is authorized if the payment occurs within 120 days after the date of authorization; or
(2) The date on which the payment is made if it occurs more than 120 days after the date of authorization.
5. Indebtedness of the company, or a series of the company, including indebtedness issued as a distribution, is not considered a liability for purposes of determinations pursuant to this section if its terms provide that payment of principal and interest are to be made only if and to the extent that payment of a distribution to the members could then be made pursuant to this section. If the indebtedness is issued as a distribution, each payment of principal or interest must be treated as a distribution, the effect of which must be measured as of the date of payment.
6. Except as otherwise provided in subsection 7, a member who receives a distribution in violation of this section is liable to the limited-liability company or the series, as applicable, for the amount of the distribution. This subsection does not affect the validity of an obligation or liability of a member created by an agreement or other applicable law for the amount of a distribution.
7. A member who receives a distribution from a limited-liability company or the series, as applicable, in violation of this section is not liable to the limited-liability company or such series, as applicable, and, in the event of its dissolution or insolvency, to its creditors, or any of them, for the amount of the distribution after the expiration of 3 years after the date of the distribution unless an action to recover the distribution from the member is commenced before the expiration of the 3-year period following the distribution.
8. Except as otherwise provided in the articles of organization or operating agreement, the manager or managers or, if the management of the company is not vested in a manager or managers, the members, may fix a record date for determining the members entitled to a distribution authorized pursuant to this section. The record date must not precede the day on which it is fixed.