§ 508 — Limitations on distributions

§ 508. Limitations on distributions. (a) A limited liability company\nshall not make a distribution to a member to the extent that, at the\ntime of the distribution, after giving effect to the distribution, all\nliabilities of the limited liability company, other than liabilities to\nmembers on account of their membership interests and liabilities for\nwhich recourse of creditors is limited to specified property of the\nlimited liability company, exceed the fair market value of the assets of\nthe limited liability company, except that the fair market value of\nproperty that is subject to a liability for which the recourse of\ncreditors is limited shall be included in the assets of the limited\nliability company only to the extent that the fair value of such\nproperty exceeds such liability.\n (b) A member who receives a distribution in violation of subdivision\n(a) of this section, and who knew at the time of distribution that the\ndistribution violated subdivision (a) of this section, shall be liable\nto the limited liability company for the amount of the distribution. A\nmember who receives a distribution in violation of subdivision (a) of\nthis section, and who did not know at the time of the distribution that\nthe distribution violated subdivision (a) of this section, shall not be\nliable for the amount of the distribution. Subject to subdivision (c) of\nthis section, this subdivision shall not affect any obligation or\nliability of a member under the operating agreement or other applicable\nlaw for the amount of a distribution.\n (c) Unless otherwise agreed, a member who receives a wrongful\ndistribution from a limited liability company shall have no liability\nunder this article or other applicable law for the amount of the\ndistribution after the expiration of three years from the date of the\ndistribution.\n