Tex.
Bus. Orgs. Code Section 153.210
Limitation on Distribution
(a)
Unless the distribution is made in compliance with Chapter 11 (Winding up and Termination of Domestic Entity), 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 (Release of Obligation to Partnership) and 153.204 (Enforceability of Obligation), 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;(2)
financial information, including condensed or summary financial statements, that are prepared on the same basis as financial statements described by Subdivision (1);(3)
projections, forecasts, or other forward-looking information relating to the future economic performance, financial condition, or liquidity of the limited partnership that is reasonable under the circumstances;(4)
a fair valuation or information from any other method that is reasonable under the circumstances; or(5)
a combination of a statement, valuation, or information authorized by this subsection.(d)
Subsection (c) does not apply to the computation of the franchise tax or any other tax imposed on a limited partnership under the laws of this state.(e)
An action alleging a distribution is made in violation of this section must be commenced not later than the second anniversary of the date of the distribution.
Source:
Section 153.210 — Limitation on Distribution, https://statutes.capitol.texas.gov/Docs/BO/htm/BO.153.htm#153.210 (accessed Apr. 13, 2024).
