Ohio Code 1776.84 – Distribution to partner where partnership insolvent
(A) A limited liability partnership shall not make a distribution to a partner to the extent that at the time of the distribution 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 on account of their economic interests and 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 creditors 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. 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.
Terms Used In Ohio Code 1776.84
- 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 Ohio Code 1776.01
- 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 a transferee of the partner. See Ohio Code 1776.01
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Limited liability partnership: means a partnership that files a statement of qualification under section 1776. See Ohio Code 1776.01
- 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.
- Partner: means a person admitted to a partnership as a partner. See Ohio Code 1776.01
- 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 or more persons to carry on as co-owners a business for-profit formed under section 1776. See Ohio Code 1776.01
- Property: means all property, real, personal, or mixed, tangible or intangible, or any interest therein. See Ohio Code 1776.01
- 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
(B) A partner of a limited liability partnership who receives a distribution in violation of division (A) of this section is liable to the partnership for the amount of that distribution. This section does not affect any obligation or liability of a partner of a limited liability partnership under an agreement or other applicable law for the amount of a distribution.