101.206 – PROHIBITED DISTRIBUTION; DUTY TO RETURN. (a)
Texas Business Organizations Code § 101.206
Summary
This law prohibits a limited liability company from distributing assets to its members if doing so would leave the company with liabilities exceeding its assets. It ensures that companies maintain financial stability and protect creditors' interests. Attorneys and paralegals should be aware of this requirement when advising LLCs on distributions.
Distributions must comply with Chapter 11 requirements.
Prohibits distributions if liabilities exceed assets post-distribution.
Protects creditors by ensuring financial stability of the LLC.
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In simple terms: Learn about Texas's PROHIBITED DISTRIBUTION; DUTY TO RETURN. (a) law, including definitions, penalties, and legal implications.. This means people must follow this rule, and breaking it can lead to criminal penalties.
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