[§425E-508]  Limitations ondistribution.  (a)  A limited partnership may not make adistribution in violation of the partnership agreement.

(b)  A limited partnership may not make adistribution if after the distribution:

(1)  The limited partnership would not be able to payits debts as they become due in the ordinary course of the limitedpartnership's activities; or

(2)  The limited partnership's total assets would beless than the sum of its total liabilities plus the amount that would beneeded, if the limited partnership were to be dissolved, wound up, andterminated at the time of the distribution, to satisfy the preferential rightsupon dissolution, winding up, and termination of partners whose preferentialrights are superior to those of persons receiving the distribution.

(c)  A limited partnership may base adetermination that a distribution is not prohibited under subsection (b) onfinancial statements prepared on the basis of accounting practices andprinciples that are reasonable in the circumstances or on a fair valuation orother method that is reasonable in the circumstances.

(d)  Except as otherwise provided in subsection(g), the effect of a distribution under subsection (b) shall be measured:

(1)  In the case of distribution by purchase,redemption, or other acquisition of a transferable interest in the limitedpartnership, as of the date money or other property is transferred or debtincurred by the limited partnership; and

(2)  In all other cases, as of the date:

(A)  The distribution is authorized, if thepayment occurs within one hundred twenty days after that date; or

(B)  The payment is made, if payment occursmore than one hundred twenty days after the distribution is authorized.

(e)  A limited partnership's indebtedness to apartner incurred by reason of a distribution made in accordance with thissection shall be at parity with the limited partnership's indebtedness to itsgeneral, unsecured creditors.

(f)  A limited partnership's indebtedness,including indebtedness issued in connection with or as part of a distribution,shall not be considered a liability for purposes of subsection (b) if the termsof the indebtedness provide that payment of principal and interest are madeonly to the extent that a distribution could then be made to partners underthis section.

(g)  If indebtedness is issued as adistribution, each payment of principal or interest on the indebtedness shallbe treated as a distribution, the effect of which is measured on the date thepayment is made. [L 2003, c 210, pt of §1]