Liability for improper distributions by limited liability partnership

Checkout our iOS App for a better way to browser and research.

(a) General rule.--If a partner of a limited liability partnership consents to a distribution made in violation of section 8231 (relating to limitations on distributions by limited liability partnership) and in consenting to the distribution fails to comply with section 8447 (relating to standards of conduct for partners), the partner is personally liable to the partnership for the amount of the distribution which exceeds the amount that could have been distributed without the violation of section 8231.

(b) Recipients.--A person that receives a distribution knowing that the distribution violated section 8231 is personally liable to the limited liability partnership, but only to the extent that the distribution received by the person exceeded the amount that could have been properly paid under section 8231.

(c) Contribution.--A person against which an action is commenced because the person is liable under subsection (a) may:

(1) join any other person that is liable under subsection (a) and seek to enforce a right of contribution from the person; and

(2) join any person that received a distribution in violation of subsection (b) and seek to enforce a right of contribution from the person in the amount the person received in violation of subsection (b).

(d) Statute of repose.--An action under this section is barred unless commenced within two years after the distribution.

Cross References. Section 8231 is referred to in section 8441 of this title.


Download our app to see the most-to-date content.