The Florida Senate

608.426  Distribution of property; impairment of capital.--

(1)  The limited liability company may, from time to time, distribute its property to its members in accordance with the provisions contained in the regulations, except that no distribution may be made if after the distribution the limited liability company would not be able to pay its debts as they become due in the usual course of business, or the limited liability company's total assets would be less than the sum of its total liabilities (except liabilities to members on account of their contributions, unless otherwise provided in the articles of organization). If the regulations do not provide for the payment of distributions to members, the distributions, when made, must be allocated on the basis of each member's relative capital account.

(2)  The managers or managing members of a limited liability company may base a determination that a distribution is not prohibited under subsection (1) either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances. In the case of any distribution based upon such a valuation, each such distribution shall be identified as a distribution based upon a current valuation of assets, and the amount distributed shall be disclosed to the receiving members concurrent with their receipt of the distribution.

(3)  A manager or managing member who votes for or assents to a distribution made in violation of this section, the articles of incorporation, or the regulations, is personally liable to the limited liability company for the amount of the distribution that exceeds what could have been distributed without such violation if it is established that he or she did not perform his or her duties in compliance with s. 608.4225. In any proceeding commenced under this section, a manager or managing member has all of the defenses ordinarily available to a manager or managing member.

(4)  A manager or managing member held liable under subsection (3) for an unlawful distribution is entitled to contribution:

(a)  From every other manager or managing member who could be liable under subsection (3) for the unlawful distribution; and

(b)  From each member for the amount the member accepted knowing the distribution was made in violation of this section, the articles of incorporation, or the regulations.

(5)  A proceeding under this section is barred unless it is commenced within 2 years after the date on which the distribution was made. In the case of a distribution in the form of indebtedness, each payment of principal or interest is treated as a distribution.

History.--s. 2, ch. 82-177; s. 40, ch. 83-215; s. 29, ch. 93-284; s. 52, ch. 97-102.