(1) A limited liability partnership may not make a distribution, including a distribution under s. 178.0806, if after the distribution any of the following applies: (a) The partnership would not be able to pay its debts as they become due in the ordinary course of the partnership’s business. (b) The partnership’s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the partnership were to be dissolved and wound up at the time of the distribution, to satisfy the preferential rights upon dissolution and winding up of partners and transferees whose preferential rights are superior to the rights of persons receiving the distribution. (2) A limited liability partnership may base a determination that a distribution is not prohibited under sub. (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 sub. (5), the effect of a distribution under sub. (1) is measured as follows: (a) In the case of a distribution described in s. 178.0102 (4) (a) 1. and 2., as of the earlier of the following: 1. The date money or other property is transferred or debt is incurred by the limited liability partnership. 2. The date the person entitled to the distribution ceases to own the interest or rights being acquired by the partnership in return for the distribution. (b) In the case of any distribution of indebtedness other than one under par. (a), as of the date the indebtedness is distributed. (c) In all cases other than those under par. (a) or (b), as of the following: 1. The date the distribution is authorized, if the payment occurs not later than 120 days after that date. 2. The date the payment is made, if the payment occurs more than 120 days after the distribution is authorized. (4) A limited liability partnership’s indebtedness to a partner or transferee incurred by reason of a distribution made in accordance with this section is at parity with the partnership’s indebtedness to its general, unsecured creditors, except to the extent subordinated by agreement. (5) A limited liability partnership’s indebtedness, including indebtedness issued as a distribution, is not a liability for purposes of sub. (1) if the terms of the indebtedness provide that payment of principal and interest is made only if and to the extent that a 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 s. 178.0806, the liabilities of a dissolved limited liability partnership do not include any claim that has been disposed of under s. 178.0807, 178.0808, or 178.0809.
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