Kentucky Statutes 362.1-932 – Circumstances preventing distribution — Liability for unlawful distribution
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(1) A limited liability partnership shall not make a distribution to the extent that at the time of and after giving effect to the distribution, all liabilities of the limited liability partnership exceed the fair value of the assets of the limited liability partnership, other than liabilities to partners or transferees on account of their transferable interest in liabilities for which the recourse of creditors is limited to specified property. The fair value of property that is subject to a liability for which the recourse of partners is limited shall be included in the assets of the limited liability partnership only to the extent that the fair value of that property exceeds that liability.
(2) A partner or transferee of a limited liability partnership who receives a distribution in violation of subsection (1) of this section is liable to the partnership for the amount of that distribution. A proceeding under this section shall be barred unless it is commenced within two (2) years of the date on which the distribution is paid to the partner or transferee.
(3) This section does not affect any obligation or liability of a partner or transferee of a limited liability partnership under an agreement or other applicable law for the amount of a distribution.
(4) For purposes of this section, the term “distribution” does not include amounts constituting reasonable compensation for present or past services or reasonable payments made in the ordinary course of business pursuant to a bona fide retirement plan or other benefits program.
Effective: July 15, 2010
History: Created 2010 Ky. Acts ch. 133, sec. 5, effective July 15, 2010.
Formerly codified as KRS § 362.1-1003.
(2) A partner or transferee of a limited liability partnership who receives a distribution in violation of subsection (1) of this section is liable to the partnership for the amount of that distribution. A proceeding under this section shall be barred unless it is commenced within two (2) years of the date on which the distribution is paid to the partner or transferee.
Terms Used In Kentucky Statutes 362.1-932
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Business: includes every trade, occupation, and profession. See Kentucky Statutes 362.1-101
- Distribution: means a transfer of money or other property from a partnership to a partner in the partner's capacity as a partner or to the transferee of all or a part of a partner's transferable interest. See Kentucky Statutes 362.1-101
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Limited liability partnership: means a partnership that has filed a statement of qualification under KRS §. See Kentucky Statutes 362.1-101
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Partnership: means an association of two (2) or more persons to carry on as co- owners a business for profit formed under KRS §. See Kentucky Statutes 362.1-101
- Property: means all property, real, personal, or mixed, tangible or intangible, or any interest therein. See Kentucky Statutes 362.1-101
- Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC
(3) This section does not affect any obligation or liability of a partner or transferee of a limited liability partnership under an agreement or other applicable law for the amount of a distribution.
(4) For purposes of this section, the term “distribution” does not include amounts constituting reasonable compensation for present or past services or reasonable payments made in the ordinary course of business pursuant to a bona fide retirement plan or other benefits program.
Effective: July 15, 2010
History: Created 2010 Ky. Acts ch. 133, sec. 5, effective July 15, 2010.
Formerly codified as KRS § 362.1-1003.