(a)Permissible Forms. The contributions of a member to an LLC may be in cash, property, or services rendered or a promissory note.
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Terms Used In Tennessee Code 48-232-101

  • Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
  • Appraisal: A determination of property value.
  • board of governors: means the board of governors of an LLC electing to be board-managed or, in the case of a foreign limited liability company, its equivalent. See Tennessee Code 48-202-101
  • Contribution agreement: means a binding agreement between a person and an LLC under which:
    (A) The person has an obligation to make a contribution to the LLC in the future. See Tennessee Code 48-202-101
  • Interest: means either or both of the following rights under the organic law of an unincorporated entity:
    (A) The right to receive distributions from the entity either in the ordinary course or upon liquidation. See Tennessee Code 48-11-201
  • LLC: means a limited liability company, organized under chapters 201-248 of this title. See Tennessee Code 48-202-101
  • Member: means a person reflected in the required records of an LLC as the owner of some governance rights of a membership interest of the LLC. See Tennessee Code 48-202-101
  • Membership: means the rights and obligations a member has pursuant to a corporation's charter, bylaws and chapters 51-68 of this title. See Tennessee Code 48-51-201
  • Membership interest: means a member's interest in an LLC consisting of a member's financial rights, a member's right to assign financial rights as provided in §. See Tennessee Code 48-202-101
  • 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.
  • Operating agreement: means a written agreement described in §. See Tennessee Code 48-202-101
  • Person: includes individual and entity. See Tennessee Code 48-202-101
  • Property: includes both personal and real property. See Tennessee Code 1-3-105
(b)Authority. Subject to any restrictions in the articles or operating agreement, an LLC through its organizers, members or board of governors may accept contributions, make contribution agreements under § 48-233-101, and make contribution allowance agreements under § 48-234-101. The action of the members or board of governors shall be by such number or interest as required to admit a member under § 48-232-102.
(c)Obligation to Perform. Except as provided in the articles or an operating agreement, a member or a party to a contribution agreement is obligated to the LLC to perform any enforceable promise to contribute cash or property, even if the member or a party to a contribution agreement is unable to perform because of death, disability or any other reason. If a member or a party to a contribution agreement does not make the required contribution of property or services, such person is obligated at the option of the LLC to contribute cash equal to that portion of the value of such contribution that has not been made. The foregoing option shall be in addition to, and not in lieu of, any other rights, including the right to specific performance, that the LLC may have against such person under the articles or the operating agreement or applicable law.
(d)Compromise of Obligation. Unless otherwise provided in the articles or an operating agreement, the obligation of a member or party to a contribution agreement to make a contribution may be compromised only by consent of all the members or the board of governors (if the LLC is board-managed). Notwithstanding the compromise, a creditor of an LLC who extends credit after the filing of articles or execution of an operating agreement or an amendment thereto which, in either case, reflects the obligation, and before the amendment thereof to reflect the compromise, may enforce the original obligation to the extent that, in extending credit, the creditor reasonably relied on the obligation of a member or party to a contribution agreement to make a contribution. A conditional obligation of a member to make a contribution to an LLC may not be enforced unless the conditions to the obligation have been satisfied or waived as to or by such member. Conditional obligations include contributions payable upon a discretionary call of the members of an LLC or the board of governors, if applicable, prior to the time the call occurs.
(e)Remedies upon Default. The articles or an operating agreement may provide that the interest of any member who fails to make any contribution that the member is obligated to make shall be subject to specified penalties for, or specified consequences of, such failure. Such penalty or consequence may take the form of:

(1) Reducing or eliminating the defaulting member’s proportional interest in the LLC;
(2) Subordinating the member’s membership interest to that of non-defaulting members;
(3) A forced sale of the member’s membership interest;
(4) Forfeiture of the member’s membership interest;
(5) The lending by other members of the amount necessary to meet the member’s commitment and the charging of interest thereon of up to the highest rate allowed by law with the repayments of such made from the first distributions from the member’s interest;
(6) A fixing of the value of the member’s membership interest by appraisal or by formula and redemption or sale of the member’s membership interest at such value; or
(7) Other penalty or consequence.
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