In the Cornerstone LPA, recycling generally means the GP may **increase an LP’s unused capital commitment** after that LP has received **cumulative distributions equal to its contributed capital**, subject to the LPA’s stated **Recycled Amount cap**.
Practical limits:
- recycling is allowed only if the **LPA expressly permits it**
- it is usually constrained by a **cap**
- it may be used for **follow-on investments** as well as new investments, depending on the LPA
- many first-time or **$10 million** funds set recycling to **0%** for simplicity
For **management fees** or **early distributions**, the same rule applies: they can only be recycled if the LPA specifically allows it and within the cap.
References:
- https://decilehub.com/base/1-general_questions/163986-under-what-circumstances-can-realized-proceeds-be-recycled-into-new-investments
- https://decilehub.com/base/1-general_questions/163618-how-do-managers-track-recycled-amount-capacity-per-lp-and-when-is-0-recycling-right-for-a-10m-fund
Practical limits:
- recycling is allowed only if the **LPA expressly permits it**
- it is usually constrained by a **cap**
- it may be used for **follow-on investments** as well as new investments, depending on the LPA
- many first-time or **$10 million** funds set recycling to **0%** for simplicity
For **management fees** or **early distributions**, the same rule applies: they can only be recycled if the LPA specifically allows it and within the cap.
References:
- https://decilehub.com/base/1-general_questions/163986-under-what-circumstances-can-realized-proceeds-be-recycled-into-new-investments
- https://decilehub.com/base/1-general_questions/163618-how-do-managers-track-recycled-amount-capacity-per-lp-and-when-is-0-recycling-right-for-a-10m-fund