N.Y. Partnership Law § 121-607: Limitations on distribution

§ 121-607. Limitations on distribution. (a) A limited partnership

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

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

liabilities of the limited partnership, other than liabilities to

partners on account of their partnership interests and liabilities for

which recourse of creditors is limited to specified property of the

limited partnership, exceed the fair market value of the assets of the

limited partnership, 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 partnership only to the

extent that the fair value of that property exceeds that liability.

(b) A limited partner who receives a distribution in violation of

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

distribution that the distribution violated subdivision (a) of this

section, shall be liable to the limited partnership for the amount of

the distribution. A limited partner 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 limited

partner under a partnership agreement or other applicable law for the

amount of a distribution.

(c) Unless otherwise agreed, a limited partner who receives a wrongful

distribution from a limited partnership 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.