§ 2-507. Limitations of distributions.
A. An LLC may not declare or make a distribution to any of its members, if after giving effect to the distribution, any of the following would occur:
1. The LLC would be unable to pay its debts as they become due in the usual course of business.
2. The fair market value of the LLC’s total assets would be less than the sum of its total liabilities plus, unless the articles of operation provide otherwise, the amount that would be needed for the preferential rights upon dissolution of members, if any.
B. An LLC may base a determination that a distribution is not prohibited by subsection (A) of this section on any of the following:
1. Financial statements and other financial data prepared on the basis of accounting practices and principles that are reasonable under the circumstances.
2. A fair market valuation or other method that is reasonable under the circumstances.
C. An LLC’s indebtedness to a member incurred by reason of a distribution made in accordance with this section is at parity with the LLC’s indebtedness to its general unsecured creditors, except to the extent subordinated by written agreement. This section does not affect the validity or priority of a security interest in an LLC’s property that is created to secure the indebtedness to the member. ONCA 08-02, eff. June 13, 2008.