State Codes and Statutes

State Codes and Statutes

Statutes > Nebraska > Chapter21 > 21-134

21-134. Limitations on distribution.(ULLCA 405) (a) A limitedliability company may not make a distribution if after the distribution:(1) the company wouldnot be able to pay its debts as they become due in the ordinary course ofthe company's activities; or(2) the company's total assets would be less thanthe sum of its total liabilities plus the amount that would be needed, ifthe company were to be dissolved, wound up, and terminated at the time ofthe distribution, to satisfy the preferential rights upon dissolution, windingup, and termination of members whose preferential rights are superior to thoseof persons receiving the distribution.(b) A limited liability company may base a determinationthat a distribution is not prohibited under subsection (a) of this sectionon financial statements prepared on the basis of accounting practices andprinciples that are reasonable in the circumstances or on a fair valuationor other method that is reasonable under the circumstances.(c) Except as otherwiseprovided in subsection (f) of this section, the effect of a distribution undersubsection (a) of this section is measured:(1) in the case of a distribution by purchase, redemption,or other acquisition of a transferable interest in the company, as of thedate money or other property is transferred or debt incurred by the company;and(2)in all other cases, as of the date:(A) the distribution is authorized, if the paymentoccurs within one hundred twenty days after that date; or(B) the payment is made,if the payment occurs more than one hundred twenty days after the distributionis authorized.(d)A limited liability company's indebtedness to a member incurred by reasonof a distribution made in accordance with this section is at parity with thecompany's indebtedness to its general, unsecured creditors.(e) A limited liabilitycompany's indebtedness, including indebtedness issued in connection with oras part of a distribution, is not a liability for purposes of subsection (a)of this section if the terms of the indebtedness provide that payment of principaland interest are made only to the extent that a distribution could be madeto members under this section.(f) If indebtedness is issued as a distribution, eachpayment of principal or interest on the indebtedness is treated as a distribution,the effect of which is measured on the date the payment is made.(g) In subsection (a)of this section, distribution does not include amounts constituting reasonablecompensation for present or past services or reasonable payments made in theordinary course of business under a bona fide retirement plan or other benefitsprogram. SourceLaws 2010, LB888, § 34.Operative Date: January 1, 2011