What is Recallable Distribution?
A recallable distribution is a return of capital that the GP can call back if the fund needs additional capital during the investment period. Unlike true gains distributions, recallable distributions increase the LP's unfunded commitment.
Some LPAs allow the GP to distribute return-of-cost proceeds and then recall them if new investments arise. This "recycling by distribution" mechanism is used when the fund is fully called but a new deal requires capital. LPs should track recallable distributions carefully to avoid missing a capital call.
Recallable distributions are distinct from carried interest distributions, which are permanent and not subject to recall (except through the clawback mechanism if the fund ultimately underperforms).
Also known as: recallable, clawback distribution