Understanding LLC Distributions in Florida: What You Need to Know

– Members of LLCs are entitled to distributions as stated in the operating agreement.
– If a member is entitled to receive a distribution, they have the status of a creditor and can use remedies available to a creditor under Florida law.
– An LLC may not make a distribution to its members if it would be unable to pay its debts or if its total assets would be less than its total liabilities. 1. An LLC can determine that a distribution is not prohibited by using properly prepared financial statements or a fair valuation of the LLC that is reasonable under the circumstances.

2. A manager who consents to a distribution made in violation of the Revised Act is personally liable to the LLC for the amount of the distribution that exceeds the amount that could have been distributed without a violation.

3. A member or other person who receives a distribution knowing that it violated the Revised Act is personally liable to the LLC, but only for the amount that exceeded what could have been properly paid without a violation.

4. LLCs are able to make distributions prior to its dissolution and winding up, but the distribution must be shared based on the agreed value as stated in the LLC’s records.

5. An individual sued for an improper distribution under the Revised Act can implead another person who may also be liable and seek to enforce a right of contribution from that person.

6. The statute of limitations on an action against an LLC, member, manager, or any other individual, for improper distributions is two years, meaning that an action is barred unless commenced within two years of when that alleged improper distribution was made.

https://www.jimersonfirm.com/blog/2013/12/floridas-revised-limited-liability-company-act-part-v-proper-and-improper-llc-distributions-under-the-revised-act/