Del. C. » Title 6 — SUBTITLE II · Commerce and Trade · Subchapter VI. Distributions and Withdrawal
Delaware Code

6 Del. C. § 17-607 (2026)

Limitations on distribution

✓ current as of May 2026
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(a) A limited partnership shall not make a distribution to a partner to the extent that at the time of the distribution, after giving effect to the distribution, all liabilities of the limited partnership, other than liabilities to partners on account of their partnership interests and liabilities for which the recourse of creditors is limited to specified property of the limited partnership, exceed the fair value of the assets of the limited partnership, except that the fair value of property that is subject to a liability for which the recourse of creditors is limited shall be included in the assets of the limited partnership only to the extent that the fair value of that property exceeds that liability. For purposes of this subsection (a), 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 benefits program.

(b) A limited partner who receives a distribution in violation of subsection (a) of this section, and who knew at the time of the distribution that the distribution violated subsection (a) of this section, shall be liable to the limited partnership for the amount of the distribution. A limited partner who receives a distribution in violation of subsection (a) of this section, and who did not know at the time of the distribution that the distribution violated subsection (a) of this section, shall not be liable for the amount of the distribution. Subject to subsection (c) of this section, this subsection shall not affect any obligation or liability of a limited partner under an agreement or other applicable law for the amount of a distribution.

(c) Unless otherwise agreed, a limited partner who receives a distribution from a limited partnership shall have no liability under this chapter or other applicable law for the amount of the distribution after the expiration of 3 years from the date of the distribution.

6 Del. C. 1953, §  1716;  59 Del. Laws, c. 105, §  1;  63 Del. Laws, c. 420, §  1;  65 Del. Laws, c. 188, §  1;  66 Del. Laws, c. 316, §  55;  69 Del. Laws, c. 258, §  38;  72 Del. Laws, c. 386, §  22; 
Notes of Decisions
Cited in 2 cases, 2012–2015 · leading case: Diamond Chapter 7 v. Friedman (In Re Century City Doctors Hosp., LLC), 466 B.R. 1 (Bankr. C.D. Cal. 2012).
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Diamond Chapter 7 v. Friedman (In Re Century City Doctors Hosp., LLC), 466 B.R. 1 (Bankr. C.D. Cal. 2012). · cites it 8× “6 Del. C. § 17-607(a)-(c). Section 17-607(a) provides that a limited partnership cannot make a distribution to a partner if it would cause the liabilities of the partnership to exceed its assets.”
ESG Capital Partners II, LP (Del. Ch. 2015). “For the reasons discussed in the preceding section, the Favored LPs did not receive a distribution. They received preferential transfers.”
— 6 Del. C. § 17-607(a) — 1 case
Diamond Chapter 7 v. Friedman (In Re Century City Doctors Hosp., LLC), 466 B.R. 1 (Bankr. C.D. Cal. 2012). “6 Del. C. § 17-607(a)-(c). Section 17-607(a) provides that a limited partnership cannot make a distribution to a partner if it would cause the liabilities of the partnership to exceed its assets.”
— 6 Del. C. § 17-607(b) — 1 case
Diamond Chapter 7 v. Friedman (In Re Century City Doctors Hosp., LLC), 466 B.R. 1 (Bankr. C.D. Cal. 2012). “6 Del. C. § 17-607(a)-(c). Section 17-607(a) provides that a limited partnership cannot make a distribution to a partner if it would cause the liabilities of the partnership to exceed its assets.”
— 6 Del. C. § 17-607(c) — 1 case
Diamond Chapter 7 v. Friedman (In Re Century City Doctors Hosp., LLC), 466 B.R. 1 (Bankr. C.D. Cal. 2012). “6 Del. C. § 17-607(a)-(c). Section 17-607(a) provides that a limited partnership cannot make a distribution to a partner if it would cause the liabilities of the partnership to exceed its assets.”
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