Guam § 15116 - (E). Requirements to Make Distribution.

§ 15116. (E). Requirements to Make Distribution.

(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

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 that

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are superior to the rights of the member receiving the

distribution.

(b) The limited liability company may base a determination

that a distribution is not prohibited under subdivision (a) on any

of the following:

(1) Financial statements prepared on the basis of

accounting practices and principles that are reasonable in

the circumstances.

(2) A fair valuation.

(3) Any other method that is reasonable in the circum-

stances.

(c) Except as provided in subdivision (e), the effect of a

distribution under subdivision (a) is measured as of

(1) the date the distribution is authorized if the

payment occurs within 120 days after the date of

authorization, or

(2) the date payment is made if it occurs more than 120

days after the date of authorization.

(d)(1) If terms of the indebtedness provide that payment of

principal and interest is to be made only if, and to the extent

that, payment of a distribution to members could then be

made under this section, indebtedness of a limited liability

company, including indebtedness issued as a distribution, is

not a liability for purposes of determinations made under

subdivision (b).

(2) If the indebtedness is issued as a distribution, each

payment of principal or interest on the indebtedness is

treated as a distribution, the effect of which is measured on

the date the payment is actually made.

(e) A member or assignee of a member is obligated to return

a distribution from a limited liability company to the extent that

(1) the member or assignee had actual knowledge of facts

indicating the impropriety of the distribution, and (2)

immediately after giving effect to the distribution, and

notwithstanding the compromise of an obligation referred to in

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subdivision (b) of Subsection 15113 (B), all liabilities of the

limited liability company, other than liabilities to members or

assignees on account of their interest in the limited liability

company and liabilities as to which recourse of creditors is

limited to specified property of the limited liability company,

exceed the fair market value of the limited liability company's

assets, provided that the fair market value of any property that is

subject to a liability as to which recourse of creditors is so

limited shall be included in the limited liability company assets

only to the extent that the fair market value of the property

exceeds this liability.

(f) A cause of action with respect to an obligation to return a

distribution pursuant to subdivision (e) is extinguished unless the

action is brought within four years after the distribution is made.