Oklahoma § 18-2030 - Restrictions on distributions - Determination of

§ 18-2030. Restrictions on distributions - Determination of

prohibited distributions - Effect of distribution – Indebtedness.

RESTRICTIONS ON DISTRIBUTIONS; DETERMINATION OF PROHIBITED

DISTRIBUTIONS; EFFECT OF DISTRIBUTION; INDEBTEDNESS

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 they 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

limited liability company were to be dissolved at the time of the

distribution, to satisfy the preferential rights upon dissolution of

members whose preferential rights 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 of this section

on:

1. Financial statements prepared on the basis of accounting

practices and principles that are reasonable in the circumstances;

or

2. A fair valuation or other method that is reasonable in the

circumstances.

C. Except as provided in subsection E of this section, the

effect of a distribution under subsection A of this section is

measured as of:

1. In the case of a distribution by purchase, redemption or

other acquisition of a capital interest in the limited liability

company, the date money or other property is transferred or debt

incurred by the limited liability company; and

2. In all other cases, the date:

a.

the distribution is authorized, if the payment occurs

within one hundred twenty (120) days after the date of

authorization, or

b.

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 a distribution made 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.

Oklahoma Statutes - Title 18. Corporations

E. 1. If the 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 of this section.

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.

Added by Laws 1992, c. 148, § 31, eff. Sept. 1, 1992. Amended by

Laws 2017, c. 323, § 44, eff. Nov. 1, 2017.