Recallable Distributions
Recallable distributions are amounts returned to LPs that can later be called back under specified LPA conditions.
Allocator relevance: High — creates hidden liquidity obligations and changes the meaning of “cash returned.”
Expanded Definition
Recalls often relate to recycling mechanics, indemnities/warranties, reserves true-ups, or follow-on needs. Recall rights typically have caps, eligible purposes, and time limits, but practices vary widely by strategy and fund documentation. Allocators treat recallability as a cashflow risk factor and incorporate it into liquidity stress tests.
Decision Authority & Governance
Governance includes LPA precision (caps, time window, purpose), reporting of recall exposure, and disciplined reserve management. Institutions expect clear disclosures so portfolio-level liquidity planning is accurate.
Common Misconceptions
- Distributions are always final.
- Recalls are too rare to model.
- Recalls mean the GP mismanaged cash.
Key Takeaways
- Recall rights convert distributions into contingent obligations.
- Caps and time windows are non-negotiable diligence points.
- Transparent reporting prevents allocator liquidity shocks.