Indiana § 23-18-5-6 - Distributions
Full text of Indiana Indiana Code § 23-18-5-6 — Distributions, with citation guidance and answers to common questions.
§ 23-18-5-6. Distributions
Sec. 6. (a) A distribution may not be made if after giving effect to the distribution:
(1) the limited liability company would not be able to pay its debts as the debts become due in the usual course of business; or
(2) the limited liability company's total assets would be less than the sum of its total liabilities plus, unless the operating agreement permits otherwise, the amount that would be needed if the affairs of the limited liability company were to be wound up at the time of the distribution to satisfy any preferential rights that are superior to the rights of members receiving the distribution.
(b) The limited liability company may base a determination that a distribution is not prohibited under subsection (a) upon one (1) of the following:
(1) Financial statements prepared on the basis of accounting practices and principles that are reasonable under the circumstances.
(2) A fair valuation of assets and liabilities or other reasonable method approved by the members or managers, if any.
(c) Except as provided in subsection (e), the effect of a distribution under subsection (a) is measured as of:
(1) the date the distribution is authorized if the payment occurs not more than one hundred twenty (120) days after the date of authorization; or
(2) the date the payment is made if it occurs more than one hundred twenty (120) days after the date of authorization.
(d) A limited liability company's indebtedness to a member incurred by reason of an obligation to make a distribution in accordance with this section is at parity with the limited liability company's indebtedness to its general unsecured creditors, except to the extent subordinated by agreement.
(e) 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 subsection (b).
(f) 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.
As added by P.L.8-1993, SEC.301.
Frequently Asked Questions About Indiana § 23-18-5-6
What does Indiana Code § 23-18-5-6 cover?
Section 23-18-5-6 ("Distributions") is part of the Indiana Code, the codified statutory law of Indiana. It sets out the legal rule or procedure described in the text above. Statutes are amended regularly, so always verify against the official source.
How do I cite Indiana § 23-18-5-6?
A common citation format is "Indiana Code § 23-18-5-6" (Indiana). Legal writing may require the code abbreviation, section number, and year or edition. Match the style required by your court, professor, or publisher.
Is this the official text of Indiana law?
No. This page is for research and education and may not include the most recent amendments. For official current law, check the Indiana official source linked on this page or consult a licensed Indiana attorney.
How does Indiana § 23-18-5-6 apply to my situation?
Statutes are interpreted in context, and application depends on your specific facts. Only a licensed attorney in Indiana can advise on how this section applies to you. Contact your state or local bar association for a referral.
Sources & Verification
Not legal advice. Verify against the official source and consult a licensed attorney in Indiana.