Distributions Recovered Clause Samples
The "Distributions Recovered" clause defines how distributions that were previously made to parties must be returned or recovered under certain circumstances. Typically, this clause applies when a distribution is later found to have been made in error, or if subsequent events (such as a legal judgment or regulatory action) require the return of funds. For example, if a partner in a partnership receives a distribution that is later determined to be improper, this clause would obligate the partner to repay the amount. Its core practical function is to ensure that distributions are only final when they are legitimate and to provide a mechanism for correcting mistakes or addressing unforeseen liabilities, thereby protecting the financial integrity of the arrangement.
Distributions Recovered. Notwithstanding anything to the contrary contained in this Agreement, in each case in which any proceeds (or the value thereof) or payments are recovered as a preferential or otherwise voidable payment (whether by a trustee in bankruptcy or otherwise) from the party which distributed those proceeds to another party or parties under this Agreement (the “Distributor”), each party to whom any of those proceeds were ultimately distributed (a “Distributee”) shall, upon the Distributor’s notice of the recovery to the Distributee, return to the Distributor an amount equal to the Distributee’s ratable share of the amount recovered, together with a ratable share of interest thereon to the extent the Distributor is required to pay interest thereon computed on the amount to be returned from the date of the recovery. For purposes of this Agreement, “proceeds” means any payment (whether made voluntarily or involuntary) from any source, including any offset of any deposit or other indebtedness, any security (including any guaranty or any collateral) or otherwise.