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Texas Business Organizations Code - Section 101.206. Prohibited Distribution; Duty To Return

Legal Research Home > Texas Lawyer > Business Organizations Code > Texas Business Organizations Code - Section 101.206. Prohibited Distribution; Duty To Return

§ 101.206. PROHIBITED DISTRIBUTION;  DUTY TO RETURN.  (a) 
A limited liability company may not make a distribution to a member 
of the company if, immediately after making the distribution, the 
company's total liabilities, other than liabilities described by 
Subsection (b), exceed the fair value of the company's total 
assets.
	(b)  For purposes of Subsection (a), the liabilities of a 
limited liability company do not include:
		(1)  a liability related to the member's membership 
interest;  or           
		(2)  except as provided by Subsection (c), a liability 
for which the recourse of creditors is limited to specified 
property of the company.
	(c)  For purposes of Subsection (a), the assets of a limited 
liability company include the fair value of property subject to a 
liability for which recourse of creditors is limited to specified 
property of the company only if the fair value of that property 
exceeds the liability.
	(d)  A member of a limited liability company who receives a 
distribution from the company in violation of this section is 
required to return the distribution to the company if the member had 
knowledge of the violation.
	(e)  This section may not be construed to affect the 
obligation of a member of a limited liability company to return a 
distribution to the company under the company agreement or other 
state or federal law.

Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.                     

Last modified: August 11, 2007