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Distributions

Tenn. Code Ann. tit. 48, ch. 236
in effect

Tenn. Code Ann. § 48-236-101 Sharing of distributions.

48-236-101. Sharing of distributions. Unless otherwise provided in or through the articles or operating agreement, distributions of cash or other assets of an LLC, including distributions on termination of the LLC except as provided in § 48-245-1101, must be allocated equally among the members. Acts 1994, ch. 868, § 1.

Tenn. Code Ann. § 48-236-102 Interim distributions.

48-236-102. Interim distributions. Except as provided in or through the articles or operating agreement or by a majority vote of the members, a member is entitled to receive distributions before the LLC's termination only as specified in the articles or operating agreement. Acts 1994, ch. 868, § 1; 1995, ch. 403, § 49.

Tenn. Code Ann. § 48-236-103 Distribution in kind.

48-236-103. Distribution in kind. Except as provided in the articles or an operating agreement, a member, regardless of the nature of the member's contribution, has no right to demand and receive any distribution from an LLC in any form other than cash. Except as provided in the articles or an operating agreement, a member may not be compelled to accept a distribution of any asset in kind from an LLC to the extent that the percentage of the asset distributed to the member exceeds a percentage of that asset that is equal to the percentage in which the member shares in distributions from the LLC. Acts 1994, ch. 868, § 1.

Tenn. Code Ann. § 48-236-104 Status as a creditor.

48-236-104. Status as a creditor. At the time a member becomes entitled to receive a distribution, the member has the status of, and is entitled to all remedies available to, a general, unsecured creditor of the LLC with respect to the distribution. The articles or an operating agreement may provide for the establishment of a record date with respect to allocations and distributions by an LLC. Acts 1994, ch. 868, § 1.

Tenn. Code Ann. § 48-236-105 Limitations on distribution.

48-236-105. Limitations on distribution. (a) Rule. No distribution may be made by an LLC if, after giving effect to the distribution: (1) The LLC would not be able to pay its debts as they became due in the normal course of business; or (2) The LLC's total assets would be less than the sum of its total liabilities plus, unless the articles or an operating agreement permit otherwise, the amount that would be needed, if the LLC were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of members whose preferential rights are superior to the rights of members receiving the distribution and excluding liabilities for which the recourse of creditors is limited to specified property of the LLC, except that the fair 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 LLC only to the extent that the fair value of the property exceeds that liability. (b) Determination. The LLC may base a determination that a distribution is not prohibited under subsection (a) either on: (1) Financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances; or (2) A fair valuation or other method that is reasonable in the circumstances. (c) General Measuring Date. The effect of a distribution under subsection (a) is measured as of: (1) The date the distribution is authorized if the payment occurs within four (4) months after the date of authorization; or (2) The date the payment is made if it occurs more than four (4) months after the date of authorization. (d) Special Measuring Date. 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 actually made. (e) Status of LLC Indebtedness for Distributions. An LLC's indebtedness to a member incurred by reason of a distribution made in accordance with this section is at parity with the LLC's indebtedness to its general unsecured creditors, except to the extent subordinated by agreement and except to the extent provided otherwise by § 48-245-1101(a). Acts 1994, ch. 868, § 1.
Source: Tennessee Code (state release 76 via Public.Resource.Org) + public chapters (Tennessee Secretary of State)URL: https://archive.org/download/gov.tn.tca/release76.2021.05.21/gov.tn.tca.title.48.htmlFetched: 10/24/2026

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