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2021 New York Laws
LLC - Limited Liability Company Law
Article 5 - Contributions and Distributions
508 - Limitations on Distributions.

Universal Citation: NY LLC L § 508 (2021)
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§  508.  Limitations on distributions. (a) A limited liability company
shall not make a distribution to a member to the  extent  that,  at  the
time  of  the distribution, after giving effect to the distribution, all
liabilities of the limited liability company, other than liabilities  to
members  on  account  of  their membership interests and liabilities for
which recourse of creditors is limited  to  specified  property  of  the
limited liability company, exceed the fair market value of the assets of
the  limited  liability  company,  except  that the fair market 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 company only to  the  extent  that  the  fair  value  of  such
property exceeds such liability.
  (b)  A  member who receives a distribution in violation of subdivision
(a) of this section, and who knew at the time of distribution  that  the
distribution  violated  subdivision (a) of this section, shall be liable
to the limited liability company for the amount of the  distribution.  A
member  who  receives  a distribution in violation of subdivision (a) of
this section, and who did not know at the time of the distribution  that
the  distribution violated subdivision (a) of this section, shall not be
liable for the amount of the distribution. Subject to subdivision (c) of
this section, this  subdivision  shall  not  affect  any  obligation  or
liability  of a member under the operating agreement or other applicable
law for the amount of a distribution.
  (c)  Unless  otherwise  agreed,  a  member  who  receives  a  wrongful
distribution  from  a  limited liability company shall have no liability
under this article or  other  applicable  law  for  the  amount  of  the
distribution  after  the  expiration of three years from the date of the
distribution.
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