2019 Connecticut General Statutes
Title 34 - Limited Partnerships, Partnerships, Professional Associations, Limited Liability Companies and Statutory Trusts
Chapter 613a - Uniform Limited Liability Company Act
Section 34-255d - Limitations on distributions.

(a) A limited liability company may not make a distribution, if after the distribution: (1) The company would not be able to pay its debts as they become due in the ordinary course of the company's activities and affairs; or (2) the company's total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the company were to be dissolved and wound up at the time of the distribution, to satisfy the preferential rights upon dissolution and winding up of members and transferees whose preferential rights are superior to those of persons receiving the distribution.

(b) A limited liability company may base a determination that a distribution is not prohibited under subsection (a) of this section on: (1) Financial statements prepared on the basis of accounting practices and principles that are reasonable under the circumstances; or (2) a fair valuation or other method that is reasonable under the circumstances.

(c) Except as provided in subsection (e) of this section, the effect of a distribution under subsection (a) of this section is measured: (1) In the case of a distribution as described in subparagraph (A) of subdivision (8) of section 34-243a, the date money or other property is transferred or debt is incurred by the company; or (2) in all other cases, as of the date: (A) The distribution is authorized, if the payment occurs not later than one hundred twenty days after that date; or (B) the payment is made, if the payment occurs more than one hundred days after the distribution is authorized.

(d) A limited liability company's indebtedness to a member or transferee incurred by reason of a distribution made in accordance with this section is at parity with the company's indebtedness to its general, unsecured creditors.

(e) A limited liability company's indebtedness, including indebtedness issued as a distribution, is not a liability for purposes of subsection (a) of this section if the terms of the indebtedness provide that payment of principal and interest is made only if and to the extent that payment of a distribution could then be made under this section. If the indebtedness is issued as a distribution, each payment of principal or interest is treated as a distribution, the effect of which is measured on the date the payment is made.

(f) In measuring the effect of a distribution under section 34-267f, the liabilities of a dissolved limited liability company do not include any claim that has been disposed of under section 34-267c, 34-267d or 34-267e.

(P.A. 16-97, S. 43.)

History: P.A. 16-97 effective July 1, 2017.