Chapter 805 - Business Organizations - Uniform Limited Partnership Act. (2001)

(805 ILCS 215/Art. 5 heading)

ARTICLE 5

CONTRIBUTIONS AND DISTRIBUTIONS

(Source: P.A. 93-967, eff. 1-1-05.)

(805 ILCS 215/501)
Sec. 501. Form of contribution. A contribution of a partner may consist of tangible or intangible property or other benefit to the limited partnership, including money, services performed, promissory notes, other agreements to contribute cash or property, and contracts for services to be performed.
(Source: P.A. 93-967, eff. 1-1-05.)

    (805 ILCS 215/502)
    Sec. 502. Liability for contribution.
    (a) A partner's obligation to contribute money or other property or other benefit to, or to perform services for, a limited partnership is not excused by the partner's death, disability, or other inability to perform personally.
    (b) If a partner does not make a promised non-monetary contribution, the partner is obligated at the option of the limited partnership to contribute money equal to that portion of the value, as stated in the required information, of the stated contribution which has not been made.
    (c) The obligation of a partner to make a contribution or return money or other property paid or distributed in violation of this Act may be compromised only by consent of all partners. A creditor of a limited partnership which extends credit or otherwise acts in reliance on an obligation described in subsection (a), without notice of any compromise under this subsection, may enforce the original obligation.
(Source: P.A. 93-967, eff. 1-1-05.)

(805 ILCS 215/503)
Sec. 503. Sharing of distributions. A distribution by a limited partnership must be shared among the partners on the basis of the value, as stated in the required records when the limited partnership decides to make the distribution, of the contributions the limited partnership has received from each partner.
(Source: P.A. 93-967, eff. 1-1-05.)

(805 ILCS 215/504)
Sec. 504. Interim distributions. A partner does not have a right to any distribution before the dissolution and winding up of the limited partnership unless the limited partnership decides to make an interim distribution.
(Source: P.A. 93-967, eff. 1-1-05.)

(805 ILCS 215/505)
Sec. 505. No distribution on account of dissociation. A person does not have a right to receive a distribution on account of dissociation.
(Source: P.A. 93-967, eff. 1-1-05.)

(805 ILCS 215/506)
Sec. 506. Distribution in kind. A partner does not have a right to demand or receive any distribution from a limited partnership in any form other than cash. Subject to Section 812(b), a limited partnership may distribute an asset in kind to the extent each partner receives a percentage of the asset equal to the partner's share of distributions.
(Source: P.A. 93-967, eff. 1-1-05.)

(805 ILCS 215/507)
Sec. 507. Right to distribution. When 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 limited partnership's obligation to make a distribution is subject to offset for any amount owed to the limited partnership by the partner or dissociated partner on whose account the distribution is made.
(Source: P.A. 93-967, eff. 1-1-05.)

    (805 ILCS 215/508)
    Sec. 508. Limitations on distribution.
    (a) A limited partnership may not make a distribution in violation of the partnership agreement.
    (b) A limited partnership may not make a distribution if after the distribution:
        (1) the limited partnership would not be able to pay

its debts as they become due in the ordinary course of the limited partnership's activities; or

(2) the limited partnership's total assets would be

less than the sum of its total liabilities plus the amount that would be needed, if the limited partnership were to be dissolved, wound up, and terminated at the time of the distribution, to satisfy the preferential rights upon dissolution, winding up, and termination of partners whose preferential rights are superior to those of persons receiving the distribution.

distribution is not prohibited under subsection (b) on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances.

(d) Except as otherwise provided in subsection (g), the

effect of a distribution under subsection (b) is measured:

(1) in the case of distribution by purchase,

redemption, or other acquisition of a transferable interest in the limited partnership, as of the date money or other property is transferred or debt incurred by the limited partnership; and

(2) in all other cases, as of the date:
(A) the distribution is authorized, if the

payment occurs within 120 days after that date; or

(B) the payment is made, if payment occurs more

than 120 days after the distribution is authorized.

(e) A limited partnership's indebtedness to a partner

incurred by reason of a distribution made in accordance with this Section is at parity with the limited partnership's indebtedness to its general, unsecured creditors.

(f) A limited partnership's indebtedness, including

indebtedness issued in connection with or as part of a distribution, is not considered a liability for purposes of subsection (b) if the terms of the indebtedness provide that payment of principal and interest are made only to the extent that a distribution could then be made to partners under this Section.

(g) If 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 made.

(Source: P.A. 93-967, eff. 1-1-05.)

    (805 ILCS 215/509)
    Sec. 509. Liability for improper distributions.
    (a) A general partner that consents to a distribution made in violation of Section 508 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 if it is established that in consenting to the distribution the general partner failed to comply with Section 408.
    (b) A partner or transferee that received a distribution knowing that the distribution to that partner or transferee was made in violation of Section 508 is personally liable to the limited partnership but only to the extent that the distribution received by the partner or transferee exceeded the amount that could have been properly paid under Section 508.
    (c) A general partner against which an action is commenced under subsection (a) may:
        (1) implead in the action any other person that is

liable under subsection (a) and compel contribution from the person; and

(2) implead in the action any person that received a

distribution in violation of subsection (b) and compel contribution from the person in the amount the person received in violation of subsection (b).

(d) An action under this Section is barred if it is not

commenced within two years after the distribution.

(Source: P.A. 93-967, eff. 1-1-05.)