Texas Business Organizations Code

§ 153.210 — LIMITATION ON DISTRIBUTION

BO § 153.210Title 4. PARTNERSHIPS · Ch. 153. LIMITED PARTNERSHIPS · Art. E. FINANCES

Statute text

(a)Unless the distribution is made in compliance with Chapter 11, a limited partnership may not make a distribution to a partner if, immediately after giving effect to the distribution and despite any compromise of a claim referred to by Sections 153.203 and 153.204, all liabilities of the limited partnership, other than liabilities to partners with respect to their partnership interests and liabilities for which the recourse of creditors is limited to specified property of the limited partnership, exceed the fair value of the partnership assets. The fair value of property that is subject to a liability for which recourse of creditors is limited shall be included in the partnership assets for purposes of this subsection only to the extent that the fair value of that property exceeds that liability.

(b)For purposes of this section, "distribution" does not include an amount constituting reasonable compensation for present or past services or a reasonable payment made in the ordinary course of business under a bona fide retirement plan or other benefits program.

(c)For purposes of this section, the determination of the amount of a limited partnership's liabilities or the value of a limited partnership's assets may be based on:

(1)financial statements of the limited partnership, which may include the financial statements of subsidiary entities or other entities accounted for on a consolidated basis or on the equity method of accounting, that:

(A)present the financial condition of the limited partnership and any subsidiary or other entities included in those financial statements in accordance with generally accepted accounting principles or international financial reporting standards; or

(B)have been prepared using the method of accounting used to file the partnership's federal income tax return or using any other accounting practices and principles that are reasonable under the circumstances;

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Legislative history

Acts 2009, 81st Leg., R.S., Ch. 84 (S.B. 1442), Sec. 52, eff. September 1, 2009. Acts 2021, 87th Leg., R.S., Ch. 39 (S.B. 1203), Sec. 32, eff. September 1, 2021.