1. A limited liabilitycompany shall not make a distribution, including a distribution under section 489.707, ifafter the distribution any of the following applies: a. The limited liabilitycompany would not be able to pay itsdebts as they become due in the ordinary course of the company’s activities and affairs. b. The limited liability company’s total assets would be less than the sum of its total liabilitiesplus the amount that would be needed, ifthe 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 the rights of persons receiving the distribution. 2. A limited liability company may base a determination that a distribution is not prohibited under subsection 1 on any of the following: a. Financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances. b. A fair valuation or other method that is reasonable under the circumstances. 3. Except as otherwise provided in subsection 5, the effect of a distribution under subsection 1 is measured as follows: a. In the case of a distribution as defined in section 489.102, subsection 5, paragraph “a”, as of the earlier of any of the following: (1) The date money or other property is transferred or debt is incurred by the limited liabilitycompany. (2) The datethe person entitled to the distribution ceases to ownthe interest or right being acquired by the limited liabilitycompany in return for the distribution. b. In the case of any other distribution of indebtedness, as of the date the indebtedness is distributed. c. In allother cases any of the following: (1) The date the distribution is authorized, ifthe payment occurs not later than one hundred twenty days after that date. (2) The date the payment is made, ifthe payment occurs more than one hundred twenty days after the distribution is authorized. 4. 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, except to the extent subordinated by agreement. 5. A limited liability company’s indebtedness, including indebtedness issued as a distribution, is not a liability for purposes of subsection 1 ifthe terms of the indebtedness provide that payment of principal and interest is made only ifand 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. 6. In measuring the effect of a distribution under section 489.707, the liabilities of a dissolved limited liability company do not include any claim that has been disposed of under section 489.704, 489.705, or 489.706.
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