Vermont § 1007 - Limitations on distributions

§ 1007. Limitations on distributions

• (a) A mutual benefit enterprise may not make a distribution if, after the distribution: (1) the enterprise would not be able to pay its debts as they become due in the ordinary
  course of the enterprise’s activities; or (2) the enterprise’s assets would be less than the sum of its total liabilities. (b) A mutual benefit enterprise may base a determination that a distribution is not prohibited
  under subsection (a) of this section on financial statements prepared on the basis
  of accounting practices and principles that are reasonable in the circumstances or
  on a fair valuation or other method that is reasonable in the circumstances. (c) Except as otherwise provided in subsection (d) of this section, the effect of a distribution
  allowed under subsection (b) of this section is measured: (1) in the case of distribution by purchase, redemption, or other acquisition of financial
  rights in the mutual benefit enterprise, as of the date money or other property is
  transferred or debt is incurred by the enterprise; and (2) in all other cases, as of the date: (A) the distribution is authorized, if the payment occurs not later than 120 days after
  that date; or (B) the payment is made, if payment occurs more than 120 days after the distribution is
  authorized. (d) If 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 made. (e) For purposes of this section, “distribution” does not include reasonable amounts paid
  to a member in the ordinary course of business as payment or compensation for commodities,
  goods, past or present services, or reasonable payments made in the ordinary course
  of business under a bona fide retirement or other benefits program. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)