La. R.S. § 12:1327 Restrictions On Making Distributions

• Library: Louisiana Statutes
• Edition: 2023
• Currency: Current with changes from the 2023 Legislative Session
• Year: 2023
• Citation: La. R.S. § 12:1327

A. No distribution shall be made if, after giving effect to the distribution:

(1) The limited liability company would not be able to pay its debts as they become due in the usual course of business.

(2) The limited liability company's total assets would be less than the sum of its total liabilities plus, unless the articles of organization or a written operating agreement provides otherwise, the amount that would be needed if the limited liability company were to be dissolved at the time of the distribution to satisfy the preferential rights of other members upon dissolution which are superior to the rights of the member receiving the distribution.

(3) The authorization or payment thereof would be contrary to any restrictions contained in the articles of organization or a written operating agreement.

B.

(1) The limited liability company may base a determination that a distribution is not prohibited under Subsection A of this Section either on financial statements prepared on the basis of accounting practices and principles that are reasonable under the circumstances or a fair valuation or other method that is reasonable under the circumstances. For purposes of this Section, generally accepted accounting principles are deemed to be reasonable.

(2) Unless the articles of organization provide otherwise, a limited liability company, including a limited liability company engaged in extractive or oil and gas activities, which owns wasting assets, including oil and gas properties, intended for sale in the ordinary or usual course of business or which owns property having a limited life, such as a lease for a term of years or patents, need make no allowance for depletion or amortization of the cost of such assets in computing total assets.

(3) In computing amounts available for distribution, proper allowance shall, except as provided in Paragraph (2) of this Subsection, be made for depreciation and depletion sustained, and ascertained or known losses of every character. Deferred assets and prepaid expenses shall be considered as assets only to the extent of amounts thereof not used or amortized.