CONTRIBUTIONS AND DISTRIBUTIONS

Iowa Code tit. XII, ch. 488, art. 5

in effect

Iowa Code § 488.501 Form of contribution.

488.501. Form of contribution. A contribution of a partner may consist of tangible or intangible property or other benefit to the limited partnership, including money, services performed, promissory notes, other agreements to contribute cash or property, and contracts for services to be performed. 2004 Acts, ch 1021, §43, 118

Iowa Code § 488.502 Liability for contribution.

488.502. Liability for contribution. 1. A partner’s obligation to contribute money or other property or other benefit to, or to perform services for, a limited partnership is not excused by the partner’s death, disability, or other inability to perform personally. 2. If a partner does not make a promised nonmonetary contribution, the partner is obligated at the option of the limited partnership to contribute money equal to that portion of the value, as stated in the required information, of the stated contribution which has not been made. 3. The obligation of a partner to make a contribution or return money or other property paid or distributed in violation of this chapter may be compromised only by consent of all partners. A creditor of a limited partnership which extends credit or otherwise acts in reliance on an obligation described in subsection 1, without notice of any compromise under this subsection, may enforce the original obligation. 2004 Acts, ch 1021, §44, 118

Iowa Code § 488.503 Sharing of distributions.

488.503. Sharing of distributions. A distribution by a limited partnership must be shared among the partners on the basis of the value, as stated in the required information when the limited partnership decides to make the distribution, of the contributions the limited partnership has received from each partner. 2004 Acts, ch 1021, §45, 118

Iowa Code § 488.504 Interim distributions.

488.504. Interim distributions. A partner does not have a right to any distribution before the dissolution and winding up of the limited partnership unless the limited partnership decides to make an interim distribution. 2004 Acts, ch 1021, §46, 118

Iowa Code § 488.505 No distribution on account of dissociation.

488.505. No distribution on account of dissociation. A person does not have a right to receive a distribution on account of dissociation. 2004 Acts, ch 1021, §47, 118

Iowa Code § 488.506 Distribution in kind.

488.506. Distribution in kind. A partner does not have a right to demand or receive any distribution from a limited partnership in any form other than cash. Subject to section 488.812, subsection 2, a limited partnership may distribute an asset in kind to the extent each partner receives a percentage of the asset equal to the partner’s share of distributions. 2004 Acts, ch 1021, §48, 118

Iowa Code § 488.507 Right to distribution.

488.507. Right to distribution. When a partner or transferee becomes entitled to receive a distribution, the partner or transferee has the status of, and is entitled to all remedies available to, a creditor of the limited partnership with respect to the distribution. However, the limited partnership’s obligation to make a distribution is subject to offset for any amount owed to the limited partnership by the partner or dissociated partner on whose account the distribution is made. 2004 Acts, ch 1021, §49, 118

Iowa Code § 488.508 Limitations on distribution.

488.508. Limitations on distribution. 1. A limited partnership shall not make a distribution in violation of the partnership agreement. 2. A limited partnership shall not make a distribution if after the distribution any of the following would result: a. The limited partnership would not be able to pay its debts as they become due in the ordinary course of the limited partnership’s activities. b. The limited partnership’s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the limited partnership were to be dissolved, wound up, and terminated at the time of the distribution, to satisfy the preferential rights upon dissolution, winding up, and termination of partners whose preferential rights are superior to those of persons receiving the distribution. 3. A limited partnership may base a determination that a distribution is not prohibited under subsection 2 on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances. 4. Except as otherwise provided in subsection 7, the effect of a distribution under subsection 2 is measured according to either of the following: a. In the case of distribution by purchase, redemption, or other acquisition of a transferable interest in the limited partnership, as of the date money or other property is transferred or debt incurred by the limited partnership. b. In all other cases, as of the date of either of the following: (1) The date the distribution is authorized, if the payment occurs within one hundred twenty days after that date. (2) The date the payment is made, if payment occurs more than one hundred twenty days after the distribution is authorized. 5. A limited partnership’s indebtedness to a partner incurred by reason of a distribution made in accordance with this section is at parity with the limited partnership’s indebtedness to its general, unsecured creditors. 6. A limited partnership’s indebtedness, including indebtedness issued in connection with or as part of a distribution, is not considered a liability for purposes of subsection 2 if the terms of the indebtedness provide that payment of principal and interest is made only to the extent that a distribution could then be made to partners under this section. 7. If indebtedness is issued as a distribution, each payment of principal or interest on the indebtedness is treated as a distribution, the effect of which is measured on the date the payment is made. 2004 Acts, ch 1021, §50, 118; 2004 Acts, ch 1175, §379

Iowa Code § 488.509 Liability for improper distributions.

488.509. Liability for improper distributions. 1. A general partner that consents to a distribution made in violation of section 488.508 is personally liable to the limited partnership for the amount of the distribution which exceeds the amount that could have been distributed without the violation if it is established that in consenting to the distribution the general partner failed to comply with section 488.408. 2. A partner or transferee that received a distribution knowing that the distribution to that partner or transferee was made in violation of section 488.508 is personally liable to the limited partnership but only to the extent that the distribution received by the partner or transferee exceeded the amount that could have been properly paid under section 488.508. 3. A general partner against which an action is commenced under subsection 1 may do any or all of the following: a. Implead in the action any other person that is liable under subsection 1 and compel contribution from the person. b. Implead in the action any person that received a distribution in violation of subsection 2 and compel contribution from the person in the amount the person received in violation of subsection 2. 4. An action under this section is barred if it is not commenced within two years after the distribution. 2004 Acts, ch 1021, §51, 118