Kentucky Revised Statutes Title XXIII. Private Corporations and Associations § 275.225.Circumstances preventing distribution; determination; definition

(1) No distribution shall be made if, after giving effect to the distribution:

(2) The determination that a distribution is not prohibited under subsection (1) of this section may be based upon:

(3) Except as provided in subsection (5) of this section, the effect of a distribution under subsection (1) of this section shall be measured as of:

(4) A limited liability company's indebtedness to a member incurred by reason of a distribution made in accordance with this section shall be at parity with the limited liability company's indebtedness to its general unsecured creditors, except to the extent subordinated by agreement.

(5) If terms of the 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, then indebtedness of a limited liability company, including indebtedness issued as a distribution, shall not be a liability for purposes of determinations made under subsection (1) of this section.

(6) If the indebtedness is issued as a distribution, then each payment of principal or interest on the indebtedness shall be treated as a distribution, the effect of which shall be measured on the date the payment is actually made.

(7) For purposes of this section, the term “distribution” shall not include amounts constituting reasonable compensation for present or past services or reasonable payments made in the ordinary course of business pursuant to a bona fide retirement plan or other benefit program.