178.0406 Limitations on distributions by limited liability partnership.

325 words·~1 min read·/wi/chapter-178/178-0406-2

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

(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

(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.