LLC Distribution Limits and Improper-Distribution Liability in Missouri

At a glance

Requirements one by one

The financial limit reaches distributions with respect to member interests

Missouri's Mo. Rev. Stat. § 347.109.1 applies when the LLC makes a distribution to one or more members with respect to their interests. It bars the payment to the extent either of two after-payment tests fails; it does not ask whether the entire distribution must be unwound when only part exceeds the limit.

During dissolution, § 347.139.1-.2 separately limits the company to winding- up activity, directs it to pay or provide for liabilities, and places creditors before member distribution liabilities and residual member amounts.

Missouri uses debt-payment and asset-preference tests

The first branch of § 347.109.1 asks whether the LLC could pay debts as they become due in the usual course. The second asks whether assets cover liabilities to which those assets are subject plus the amount needed for superior member preferences on a hypothetical dissolution.

The operating agreement may remove the preference add-on. The calculation also excludes liabilities to members or former members in their status as such. The text does not state a separate limited-recourse-debt rule.

Financial statements and reasonable valuation are alternatives

Under § 347.109.2, the LLC may rely on financial statements prepared on the basis of generally accepted accounting principles and practices reasonable under the circumstances. It may instead use fair valuation or another method reasonable under the circumstances. This page does not select a method or determine values.

The 120-day window selects the measurement date

Section 347.109.3 measures authorization when the distribution actually occurs within 120 days after authorization. If payment occurs later, it measures the payment date. The section states no special timing rule for a redemption, interest acquisition, issuance of distribution debt, or installments on that debt.

Recipient and authorizer liability use different mental-state language

Under § 347.109.4, a member who receives a distribution violating the section or operating agreement is within the liability rule without a stated knowledge qualifier. A person vested by the operating agreement with authority to make distributions is included only when that person knowingly authorized or permitted the payment.

For either route, liability is to the LLC for the wrongful distribution's value, but only as much as is needed to discharge LLC liabilities incurred before the distribution. Multiple authorizers held liable may seek contribution from one another; the subsection does not state a recipient contribution right or a contribution claim against the recipient.

The special period runs from the distribution

Section 347.109.4 makes the recipient and knowing authorizer liable “for a period of three years following the date of the distribution.” It does not use the action-commencement wording found in some limitation statutes, so this page does not recast it as a filing deadline or decide how a court would characterize the period.

Entitlement gives a member creditor remedies

At entitlement, § 347.107 gives the member creditor status and all remedies available to an LLC creditor with respect to the distribution. It does not call the distribution claim secured or senior. The separate liquidation order in § 347.139 excludes member distribution liabilities from the first creditor tier.

What trips people up

• The preference add-on is agreement-sensitive. That permission does not erase the debt-payment test or the basic comparison of assets and liabilities.
• The recipient rule does not say “knowing.” Knowledge appears in the authorizer clause, not the recipient clause.
• The recovery ceiling looks backward. Liability is limited to what is needed for LLC liabilities incurred before the wrongful distribution.
• Creditor status does not settle liquidation priority. Section 347.139 separately orders distribution liabilities after the first creditor tier.

Common questions

Must Missouri use GAAP for the determination?

No. GAAP-based statements are one option; fair valuation or another reasonable method is also allowed.

Does authorization always set the test date?

Only when the distribution actually occurs within 120 days. A later payment is measured when paid.

May the operating agreement choose who can authorize distributions?

Section 347.109.4 expressly refers to the person or persons vested with that authority under the operating agreement. It does not decide whether a particular authorization complied with the agreement.

Does the statute give every creditor the LLC's wrongful-distribution claim?

No. Section 347.109.4 states liability to the LLC. This page does not infer a separate creditor-owned claim from the recovery ceiling or from § 347.107.

Statutes and sources

• Mo. Rev. Stat. § 347.107 — creditor status and remedies when a member becomes entitled to a distribution. Official current section (accessed September 19, 2026).
• Mo. Rev. Stat. § 347.109 — financial tests, determination methods, measurement, liability, contribution, and three-year period. Official current section (accessed September 19, 2026).
• Mo. Rev. Stat. § 347.139 — dissolution activity and asset-distribution order. Official current section (accessed September 19, 2026).