Texas Business Organizations Code 101.153 – Failure to Perform Enforceable Promise; Consequences
(a) A member of a limited liability company, or the member’s legal representative or successor, who does not perform an enforceable promise to make a contribution, including a previously made contribution, or to otherwise pay cash or transfer property to the company, is obligated, at the request of the company, to pay in cash the agreed value of the contribution, as stated in the company agreement or the company’s records required under Sections 3.151 and 101.501, less:
(1) any amount already paid for the contribution; and
(2) the value of any property already transferred.
(b) The company agreement of a limited liability company may provide that the membership interest of a member who fails to perform an enforceable promise to make a payment of cash or transfer property to the company, whether as a contribution or in connection with a contribution already made, may be:
(1) reduced;
(2) subordinated to other membership interests of nondefaulting members;
(3) redeemed or sold at a value determined by appraisal or other formula; or
(4) made the subject of:
(A) a forced sale;
(B) forfeiture;
(C) a loan from other members of the company in an amount necessary to satisfy the enforceable promise; or
(D) another penalty or consequence.
Terms Used In Texas Business Organizations Code 101.153
- Appraisal: A determination of property value.
- Contribution: means a tangible or intangible benefit that a person transfers to an entity in consideration for an ownership interest in the entity or otherwise in the person's capacity as an owner or a member. See Texas Business Organizations Code 1.002
- Limited liability company: means an entity governed as a limited liability company under Title 3 or 7. See Texas Business Organizations Code 1.002
- Member: means :
(A) in the case of a limited liability company, a person who has become, and has not ceased to be, a member in the limited liability company as provided by its governing documents or this code;
(B) in the case of a nonprofit corporation, a person who has membership rights in the nonprofit corporation under its governing documents;
(C) in the case of a cooperative association, a member of a nonshare or share association;
(D) in the case of a nonprofit association, a person who has membership rights in the nonprofit association under its governing documents; or
(E) in the case of a professional association, a person who has membership rights in the professional association under its governing documents. See Texas Business Organizations Code 1.002 - Membership interest: means a member's interest in an entity. See Texas Business Organizations Code 1.002
- Property: includes tangible and intangible property and an interest in that property. See Texas Business Organizations Code 1.002