N.Y. Limited Liability Company Law § 508: Limitations on distributions

§ 508. Limitations on distributions. (a) A limited liability company

shall not make a distribution to a member to the extent that, at the

time of the distribution, after giving effect to the distribution, all

liabilities of the limited liability company, other than liabilities to

members on account of their membership interests and liabilities for

which recourse of creditors is limited to specified property of the

limited liability company, exceed the fair market value of the assets of

the limited liability company, except that the fair market value of

property that is subject to a liability for which the recourse of

creditors is limited shall be included in the assets of the limited

liability company only to the extent that the fair value of such

property exceeds such liability.

(b) A member who receives a distribution in violation of subdivision

(a) of this section, and who knew at the time of distribution that the

distribution violated subdivision (a) of this section, shall be liable

to the limited liability company for the amount of the distribution. A

member who receives a distribution in violation of subdivision (a) of

this section, and who did not know at the time of the distribution that

the distribution violated subdivision (a) of this section, shall not be

liable for the amount of the distribution. Subject to subdivision (c) of

this section, this subdivision shall not affect any obligation or

liability of a member under the operating agreement or other applicable

law for the amount of a distribution.

(c) Unless otherwise agreed, a member who receives a wrongful

distribution from a limited liability company shall have no liability

under this article or other applicable law for the amount of the

distribution after the expiration of three years from the date of the

distribution.