LLC Distribution Limits and Improper-Distribution Liability in New Hampshire

At a glance

Requirements one by one

New Hampshire uses a single debts-as-due test

RSA 304-C:93(I) prohibits a member distribution to the extent that, at the time of payment and after giving effect to it, the company could not pay debts as they become due. Sections 304-C:91 through 304-C:95 state no separate asset- liability, superior-preference, fair-value, or surplus ceiling.

Those provisions also state no menu of accounting statements or valuation methods and no special measurement rule for authorization, delay, redemption, an interest acquisition, distribution debt, or a later debt payment. The statutory time is the distribution itself.

The knowing member owes only the unlawful excess

Under RSA 304-C:93(II), a member who knew at distribution that the payment violated the debts-as-due test is liable to the LLC only for the amount exceeding what could properly have been paid. A member who lacked that knowledge is not liable for any part of the distribution under the paragraph.

Sections 304-C:91 through 304-C:95 create no separate manager or member authorizer claim and state no contribution or impleader procedure. They also state no special limitation or repose period for improper-distribution recovery.

Entitlement creates default creditor status, not stated priority

RSA 304-C:92 gives an entitled member default creditor status and remedies, subject to the operating agreement, the financial limit, and the winding-up order. It states no distribution-debt parity, secured status, conditional-debt exclusion, subordination rule, or payment-by-payment retest.

The agreement controls several distribution mechanics

Unless the operating agreement provides otherwise, RSA 304-C:91 supplies the distribution definition and its exclusions. Section 304-C:94 gives the applicable member or manager majority the default decision over interim timing and aggregate amount. Section 304-C:95 follows the agreement for allocation and otherwise uses the agreed value of received, unreturned contributions.

Winding-up owner payments require revenue clearance

Before distributing assets to members or managers in winding up, RSA 304-C:141(I) requires the LLC or wind-up actor to obtain the Department of Revenue Administration certificate described by RSA 77-A:18. Subsection (II) then pays or adequately provides for creditors, addresses distribution liabilities, returns contributions, and distributes the remaining LLC interests in the stated agreement-controlled order.

What trips people up

• There is no balance-sheet test in the distribution section. The operative ceiling is ability to pay debts as they become due.
• Receipt alone is not enough for statutory recovery. The recipient must be a member who knew of the violation, and the measure is the unlawful excess.
• Tax clearance comes before owner distributions in winding up. It is not merely a later cancellation-filing step.

Common questions

Does a redemption count as a distribution?

By default, yes. RSA 304-C:91(III) treats a partial or complete redemption of a member's membership rights as a liquidating distribution, unless the operating agreement changes the defined terms.

Is a manager liable simply for approving an improper payment?

Sections 304-C:91 through 304-C:95 do not state a separate authorizer claim. Their express recovery rule concerns a knowing member-recipient.

Does the statute impose a special two- or three-year cutoff?

No special improper-distribution period appears in §§ 304-C:91 through :95. This page does not substitute an uncited general civil limitations period.

Statutes and sources

• RSA 304-C:91 to :95 — define distributions, state creditor status, impose the financial and recipient-liability rules, and govern interim decisions and allocation. Official §§ 304-C:91, 304-C:92, 304-C:93, 304-C:94, and 304-C:95 (accessed September 19, 2026).
• RSA 304-C:107 and :115 — state the operating-agreement duty and liability boundaries. Official § 304-C:107 and § 304-C:115 (accessed September 19, 2026).
• RSA 304-C:141 — requires revenue clearance before winding-up owner distributions and supplies the asset order. Official current text (accessed September 19, 2026).