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This entry was published on 2014-09-22
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SECTION 508
Limitations on distributions
Limited Liability Company Law (LLC) CHAPTER 34, ARTICLE 5
§ 508. Limitations on distributions. (a) A limited liability company
shall not make a distribution to a member to the extent that, at the
time of the distribution, after giving effect to the distribution, all
liabilities of the limited liability company, other than liabilities to
members on account of their membership interests and liabilities for
which recourse of creditors is limited to specified property of the
limited liability company, exceed the fair market value of the assets of
the limited liability company, except that the fair market value of
property that is subject to a liability for which the recourse of
creditors is limited shall be included in the assets of the limited
liability company only to the extent that the fair value of such
property exceeds such liability.

(b) A member who receives a distribution in violation of subdivision
(a) of this section, and who knew at the time of distribution that the
distribution violated subdivision (a) of this section, shall be liable
to the limited liability company for the amount of the distribution. A
member who receives a distribution in violation of subdivision (a) of
this section, and who did not know at the time of the distribution that
the distribution violated subdivision (a) of this section, shall not be
liable for the amount of the distribution. Subject to subdivision (c) of
this section, this subdivision shall not affect any obligation or
liability of a member under the operating agreement or other applicable
law for the amount of a distribution.

(c) Unless otherwise agreed, a member who receives a wrongful
distribution from a limited liability company shall have no liability
under this article or other applicable law for the amount of the
distribution after the expiration of three years from the date of the
distribution.