Section 35-8-604 - Distributions(1) A distribution may not be made if, after giving effect to the distribution: (a) the limited liability company would not be able to pay its debts as they become due in the usual course of business; or(b) the limited liability company's total assets would be less than the sum of its total liabilities plus, unless the articles of organization or the operating agreement provides otherwise, the amount that would be needed, if the limited liability company were to be dissolved at the time of the distribution, to satisfy the preferential rights of other members upon dissolution that are superior to the rights of the member receiving the distribution.(2) The limited liability company may base a determination that a distribution is not prohibited under subsection (1) on either:(a) financial statements prepared on the basis of accounting practices and principles that are reasonable under the circumstances; or(b) a fair valuation or other method that is reasonable under the circumstances.(3) Except as provided in subsection (5), the effect of a distribution under subsection (1) is measured as of: (a) the date the distribution is authorized if the payment occurs within 120 days after the date of authorization; or(b) the date payment is made if it occurs more than 120 days after the date of authorization.(4) A limited liability company's indebtedness to a member incurred by reason of a distribution to be made to that member in accordance with this section is at parity with the limited liability company's indebtedness to its general unsecured creditors, except as otherwise provided by agreement.(5) For purposes of this section: (a) if terms of indebtedness provide that payment of principal and interest is to be made only if and to the extent that payment of a distribution to members could then be made under this section, indebtedness of a limited liability company, including indebtedness issued as a distribution, is not a liability for purposes of determinations made under subsection (2); and(b) if the 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.En. Sec. 35, Ch. 120, L. 1993.