(a)Distribution of Assets.

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Terms Used In Tennessee Code 48-249-620

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Court: includes every court and judge having jurisdiction in the case. See Tennessee Code 48-202-101
  • Directors: means natural persons, designated in the charter or bylaws or elected or appointed by the incorporators, and their successors and natural persons elected or appointed to act as members of the board, irrespective of the names or titles by which such persons are described. See Tennessee Code 48-51-201
  • Dissolution: means that the LLC has incurred an event under §. See Tennessee Code 48-202-101
  • Distribution: means a direct or indirect transfer of money or other property by an LLC, except for the issuance of its own membership interests or financial rights, with or without consideration, or an incurrence or issuance of indebtedness, whether directly or indirectly, including through a guaranty, to or for the benefit of any of its members or holders of financial rights, as applicable, in respect of membership interests or financial rights. See Tennessee Code 48-249-102
  • Financial rights: means a member's or holder's rights to:
    (A) Share in profits and losses, as provided in §. See Tennessee Code 48-249-102
  • holder: means a person, other than a member, owning any financial rights in an LLC. See Tennessee Code 48-249-102
  • Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
  • LLC: means a limited liability company, organized under chapters 201-248 of this title. See Tennessee Code 48-202-101
  • Member: means a person that has been admitted to an LLC as a member, as provided in §. See Tennessee Code 48-249-102
  • 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
  • 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.
  • Person: means an individual or an entity. See Tennessee Code 48-249-102
  • Share: means the unit into which the proprietary interests in a corporation are divided. See Tennessee Code 48-11-201
  • Statute of limitations: A law that sets the time within which parties must take action to enforce their rights.
  • Termination: means the end of an LLC's existence as a legal entity and occurs when the articles of termination are filed with the secretary of state under §. See Tennessee Code 48-202-101
(1) Upon the winding up of an LLC, the assets shall be distributed as follows:

(A) First, to creditors, including members and holders of financial rights who are creditors, to the extent otherwise permitted by law, in satisfaction of liabilities of the LLC, whether by payment or the making of reasonable provisions for payment of such liabilities, other than liabilities:

(i) For which reasonable provision for payment has been made; and
(ii) For distributions to members and holders of financial rights under § 48-249-305;
(B) Second, to members, former members and holders of financial rights, in satisfaction of liabilities for distributions under § 48-249-305; and
(C) Third, to members and holders of financial rights, first, for the return of their contributions that have not previously been returned, and, second, respecting the membership interests of members and the financial rights of holders of financial rights, as applicable, in the proportions in which the members and holders of financial rights, as applicable, share in distributions under § 48-249-305.
(2) Any distributions in any form other than cash shall be subject to § 48-249-305(d).
(b)Provisions for claims. An LLC that has dissolved shall pay, or make reasonable operating provision to pay, all claims and obligations, including all contingent, conditional or unmatured claims and obligations, known to the LLC, regardless of whether the identity of the claimant is known. If there are sufficient assets, such claims and obligations shall be paid in full, and any such provision for payment made shall be made in full. If there are insufficient assets, such claims and obligations shall be paid or provided for according to their priority, and, among claims and obligations of equal priority, ratably, to the extent of assets available for payment. Any remaining assets shall be distributed as provided in this chapter. Any receiver or custodian winding up an LLC’s affairs who has complied with this section shall not be personally liable to the claimants of the dissolved LLC by reason of the receiver’s or custodian’s actions in winding up the LLC.
(c)Debts incurred during winding up. All known contractual debts, obligations, and liabilities incurred in the course of winding up and terminating the LLC’s affairs shall be paid or provided for by the LLC before the distribution of assets to a member or holder of financial rights. A person to whom this kind of debt, obligation, or liability is owed but not paid may pursue any remedy, before the expiration of the applicable statute of limitations, against the members, directors, managers or officers of the LLC, as applicable, who are responsible for, but who fail to cause, the LLC to pay or make provision for payment of the debts, obligations, and liabilities, or against members or holders of financial rights to the extent permitted under § 48-249-307. This subsection (c) does not apply to dissolution, winding up or termination of the existence of the LLC under the supervision or order of a court.
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