Sec. 25-35. Liability for unlawful distributions.

383 words·~2 min read·/il/chapter-805/act-180/25-35

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

(a)Except as otherwise provided in subsections

(b)and (c), if a member of a member-managed company or a member or manager of a manager-managed company consents to a distribution made in violation of Section 25-30, the articles of organization, or the operating agreement and in consenting to the distribution fails to comply with Section 15-3, the member or manager is personally liable to the company for the amount of the distribution that exceeds the amount that could have been distributed without violating Section 25-30, the articles of organization, or the operating agreement.

(b)To the extent the operating agreement of a limited liability company expressly relieves a member of the authority and responsibility to consent to distributions and imposes that authority and responsibility on one or more other members, the liability stated in subsection

(a)applies to the other members and not the member that the operating agreement relieves of authority and responsibility.

(c)If the members of a member-managed company or the members or managers of a manager-managed company consent to a distribution that violates the articles of organization or the operating agreement, but does not violate Section 25-30, by a vote that would have been sufficient to amend the articles of organization or operating agreement, as the case may be, the liability stated in subsection

(a)does not apply.

(d)A person that receives a distribution and that knew the distribution was made in violation of Section 25-30, the articles of organization, or the operating agreement is personally liable to the company, but only to the extent that the distribution received by the person exceeded the amount that could have been properly paid under Section 25-30.

(e)A person against whom an action is brought under this Section may implead in the action:

(1)all members or managers who consented to the distribution in violation of subsection

(a)of this Section and may compel contribution from them; and

(2)all persons who received a distribution in violation of subsection

(d)of this

Section and may compel contribution from any person receiving such a distribution in the amount received in violation of subsection

(d)of this Section.

(f)A proceeding under this Section is barred unless it is commenced within 2 years after the distribution.