California Corporations Code 17707.05 – (a) Except as otherwise provided in the articles of organization …
(a) Except as otherwise provided in the articles of organization or the written operating agreement, after determining that all the known debts and liabilities of a limited liability company in the process of winding up, including, without limitation, debts and liabilities to members who are creditors of the limited liability company, have been paid or adequately provided for, the remaining assets shall be distributed among the members according to their respective rights and preferences as follows:
(1) To members in satisfaction of liabilities for distributions pursuant to Sections 17704.04, 17704.05, and 17704.06.
Terms Used In California Corporations Code 17707.05
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Person: includes a corporation as well as a natural person. See California Corporations Code 18
(2) To members of the limited liability company for the return of their contributions.
(3) To members in the proportions in which those members share in distributions.
(b) If the winding up is by court proceeding or subject to court supervision, the distribution shall not be made until after the expiration of any period for the presentation of claims that has been prescribed by order of the court.
(c) (1) The payment of a debt or liability, whether the whereabouts of the creditor is known or unknown, has been adequately provided for if the payment has been provided for by either of the following means:
(A) Payment for the debt or liability has been assumed or guaranteed in good faith by one or more financially responsible persons or by the United States government or any agency of the United States government, and the provision, including the financial responsibility of the person, was determined in good faith and with reasonable care by the members or managers of the limited liability company to be adequate at the time of any distribution of the assets pursuant to this section.
(B) The amount of the debt or liability has been deposited as provided in Section 2008 of the General Corporation Law.
(2) This subdivision shall not prescribe the exclusive means of making adequate provision for debts and liabilities.
(Added by Stats. 2012, Ch. 419, Sec. 20. (SB 323) Effective January 1, 2013. Operative January 1, 2014, by Sec. 32 of Ch. 419.)