Contributions and Distributions

R.I. Gen. Laws tit. 7, ch. 7-13.1, pt. 5

in effect

R.I. Gen. Laws § 7-13.1-501 Form of contribution.

7-13.1-501. Form of contribution. A contribution may consist of property transferred to, services performed for, or another benefit provided to the limited partnership or an agreement to transfer property to, perform services for, or provide another benefit to the partnership. P.L. 2022, ch. 121, § 2, effective January 1, 2023; P.L. 2022, ch. 122, § 2, effective January 1, 2023.

R.I. Gen. Laws § 7-13.1-502 Liability for contribution.

7-13.1-502. Liability for contribution. (a) A person’s obligation to make a contribution to a limited partnership is not excused by the person’s death, disability, termination, or other inability to perform personally. (b) If a person does not fulfill an obligation to make a contribution other than money, the person is obligated at the option of the limited partnership to contribute money equal to the value, as stated in the required information, of the part of the contribution which has not been made. (c) The obligation of a person to make a contribution may be compromised only by the affirmative vote or consent of all the partners. If a creditor of a limited partnership extends credit or otherwise acts in reliance on an obligation described in subsection (a) of this section without knowledge or notice of a compromise under this subsection, the creditor may enforce the obligation. P.L. 2022, ch. 121, § 2, effective January 1, 2023; P.L. 2022, ch. 122, § 2, effective January 1, 2023.

R.I. Gen. Laws § 7-13.1-503 Sharing of and right to distributions before dissolution.

7-13.1-503. Sharing of and right to distributions before dissolution. (a) Any distribution made by a limited partnership before its dissolution and winding up 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, except to the extent necessary to comply with a transfer effective under § 7-13.1-702 or charging order in effect under § 7-13.1-703. (b) A person has a right to a distribution before the dissolution and winding up of a limited partnership only if the partnership decides to make an interim distribution. A person’s dissociation does not entitle the person to a distribution. (c) A person does not have a right to demand or receive a distribution from a limited partnership in any form other than money. Except as otherwise provided in § 7-13.1-810(f), a partnership may distribute an asset in kind only if each part of the asset is fungible with each other part and each person receives a percentage of the asset equal in value to the person’s share of distributions. (d) If 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 partnership’s obligation to make a distribution is subject to offset for any amount owed to the partnership by the partner or a person dissociated as a partner on whose account the distribution is made. P.L. 2022, ch. 121, § 2, effective January 1, 2023; P.L. 2022, ch. 122, § 2, effective January 1, 2023.

R.I. Gen. Laws § 7-13.1-504 Limitations on distributions.

7-13.1-504. Limitations on distributions. (a) A limited partnership may not make a distribution, including a distribution under § 7-13.1-810, if after the distribution: (1) The partnership would not be able to pay its debts as they become due in the ordinary course of the partnership’s activities and affairs; or (2) The partnership’s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the partnership were to be dissolved and wound up at the time of the distribution, to satisfy the preferential rights upon dissolution and winding up of partners and transferees whose preferential rights are superior to the rights of persons receiving the distribution. (b) A limited partnership may base a determination that a distribution is not prohibited under subsection (a) of this section 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 under the circumstances. (c) Except as otherwise provided in subsection (e) of this section, the effect of a distribution under subsection (a) of this section is measured: (1) In the case of a distribution as defined in § 7-13.1-102(5)(i), as of the earlier of: (i) The date money or other property is transferred or debt is incurred by the limited partnership; or (ii) The date the person entitled to the distribution ceases to own the interest or right being acquired by the partnership in return for the distribution; (2) In the case of any other distribution of indebtedness, as of the date the indebtedness is distributed; and (3) In all other cases, as of the date: (i) The distribution is authorized, if the payment occurs not later than one hundred twenty (120) days after that date; or (ii) The payment is made, if the payment occurs more than one hundred twenty (120) days after the distribution is authorized. (d) A limited partnership’s indebtedness to a partner or transferee incurred by reason of a distribution made in accordance with this section is at parity with the partnership’s indebtedness to its general, unsecured creditors, except to the extent subordinated by agreement. (e) A limited partnership’s indebtedness, including indebtedness issued as a distribution, is not a liability for purposes of subsection (a) of this section if the terms of the indebtedness provide that payment of principal and interest is made only if and to the extent that payment of a distribution could then be made under this section. If the indebtedness is issued as a distribution, each payment of principal or interest is treated as a distribution, the effect of which is measured on the date the payment is made. (f) In measuring the effect of a distribution under § 7-13.1-810, the liabilities of a dissolved limited partnership do not include any claim that has been disposed of under § 7-13.1-806, 7-13.1-807, or 7-13.1-808. P.L. 2022, ch. 121, § 2, effective January 1, 2023; P.L. 2022, ch. 122, § 2, effective January 1, 2023.

R.I. Gen. Laws § 7-13.1-505 Liability for improper distributions.

7-13.1-505. Liability for improper distributions. (a) If a general partner consents to a distribution made in violation of § 7-13.1-504 and in consenting to the distribution fails to comply with § 7-13.1-409, the general partner 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 of § 7-13.1-504. (b) A person that receives a distribution knowing that the distribution violated § 7-13.1-504 is personally liable to the limited partnership but only to the extent that the distribution received by the person exceeded the amount that could have been properly paid under § 7-13.1-504. (c) A general partner against which an action is commenced because the general partner is liable under subsection (a) of this section may: (1) Implead any other person that is liable under subsection (a) of this section and seek to enforce a right of contribution from the person; and (2) Implead any person that received a distribution in violation of subsection (b) of this section and seek to enforce a right of contribution from the person in the amount the person received in violation of subsection (b) of this section. (d) An action under this section is barred unless commenced not later than two (2) years after the distribution. P.L. 2022, ch. 121, § 2, effective January 1, 2023; P.L. 2022, ch. 122, § 2, effective January 1, 2023.

Source: State of Rhode Island General Assembly (rilegislature.gov)URL: https://webserver.rilegislature.gov/Statutes/TITLE7/7-13.1/7-5/INDEX.htmFetched: 10/20/2026