{"data":{"id":"us-ky/krs-362.2-508","jurisdiction":"us-ky","citation":"KRS 362.2-508","heading":"Limitations on distribution.","body":"(1) A limited partnership shall not make a distribution in violation of the partnership\nagreement.\n(2) A limited partnership shall not make a distribution if after the distribution:\n(a) The limited partnership would not be able to pay its debts as they become due\nin the ordinary course of the limited partnership's activities; or\n(b) The limited partnership's total assets would be less than the sum of its total\nliabilities plus the amount that would be needed, if the limited partnership\nwere to be dissolved, wound up, and terminated at the time of the distribution,\nto satisfy the preferential rights upon dissolution, winding up, and termination\nof partners whose preferential rights are superior to those of persons receiving\nthe distribution.\n(3) A limited partnership may base a determination that a distribution is not prohibited\nunder subsection (2) of this section on financial statements prepared on the basis of\naccounting practices and principles that are reasonable in the circumstances or on a\nfair valuation or other method that is reasonable in the circumstances.\n(4) Except as otherwise provided in subsection (7) of this section, the effect of a\ndistribution under subsection (2) of this section is measured:\n(a) In the case of distribution by purchase, redemptio n, or other acquisition of a\ntransferable interest in the limited partnership, as of the date money or other\nproperty is transferred or debt incurred by the limited partnership; and\n(b) In all other cases, as of the date:\n1. The distribution is authorized, if the payment occurs within one hundred\ntwenty (120) days after that date; or\n2. The payment is made, if payment occurs more than one hundred twenty\n(120) days after that date.\n(5) A limited partnership's indebtedness to a partner incurred by reason of a distribution\nmade in accordance with this section is at parity with the limited partnership's\nindebtedness to its general, unsecured creditors.\n(6) A limited partnership's indebtedness, including indebtedness issued in connection\nwith or as part of a dist ribution, is not considered a liability for purposes of\ndeterminations under subsection (2) of this section if the terms of the indebtedness\nprovide that payment of principal and interest are made only to the extent that a\ndistribution could then be made to partners under this section.\n(7) If indebtedness is issued as a distribution, each payment of principal or interest on\nthe indebtedness is treated as a distribution, the effect of which is measured on the\ndate the payment is made.\n(8) For purposes of this section, the term \"distribution\" shall not include amounts\nconstituting reasonable compensation for present or past services or reasonable\npayments made in the ordinary course of business pursuant to a bona fide retirement\nplan or other benefits program.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=34598","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:58:58Z","sha256":"4459d3a789d20b4fed20a8b5257719f7e8836c35b7555d2502b5487080915ae9","source_id":"us-ky","stale":false,"prev":"us-ky/krs-362.2-507","next":"us-ky/krs-362.2-509"},"notice":"GroundRules: Original legal text. Not legal advice."}