2016 Tennessee Code
Title 48 - Corporations and Associations
Limited Liability Companies
Chapter 249 - Tennessee Revised Limited Liability Company Act
Part 3 - Finance
§ 48-249-302. Liability for contributions.
(a) Obligation to perform. A member or other person who has agreed in writing to make a contribution of tangible or intangible property or other benefit to, or to perform services for, an LLC is obligated to make that contribution, even if the member or other person is unable to perform personally because of death, disability or any other reason.
(b) Option to require cash. If a member or other person does not make a required contribution of property or services, then, at the option of the LLC to which the member or other person is obligated, the member or the other person shall be obligated to contribute money equal to the value, as stated in the LLC documents or the records of the LLC, of the portion of the required contribution that has not been made. This option of the LLC is in addition to, and not in lieu of, any other rights and remedies, including the right to specific performance, that the LLC or its members may have against such member or other person, whether under this chapter, under the LLC documents, or otherwise.
(c) Enforcement by creditor. A creditor of an LLC that extends credit or otherwise acts in reliance on an obligation described in subsection (a), and without notice of any compromise under § 48-249-401(f)(3), may enforce the original obligation.
(d) Remedies on default. The LLC documents may provide that the interest of any member or other person who fails to make any contribution that the member or other person is obligated to make to an LLC shall be subject to specified penalties for, or specified consequences of, such failure. Such a penalty or consequence may take the form of:
(1) Reducing or eliminating the defaulting member's or person's proportional interest in the LLC;
(2) Subordinating the interest of the defaulting member or other person to that of nondefaulting members or other persons;
(3) Forcing a sale of the interest of the defaulting member or other person;
(4) Causing forfeiture of the interest of the defaulting member or other person;
(5) Permitting other members or persons to lend to the LLC the amount necessary to satisfy the obligation of the defaulting member or other person, and charging interest on the borrowed amount, at a rate up to the highest rate allowed by law, with repayments of the loans being made from the distributions allocable to the interest of the defaulting member or other person;
(6) Fixing the value of the interest of the defaulting member or other person by appraisal or by formula and redemption, or selling the interest of the defaulting member or other person at that fixed value; or
(7) Any other penalty or consequence.
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