1836 - 1842 Flashcards
Liquidation is done without intervention of the court.
Extrajudicial
Who will wind up? Under Extrajudicial
- The liquidating partner or partners as agreed upon by all of the partners.
- The partners who have not wrongfully dissolved the partnership.
- The legal representative of the last surviving partner who is not insolvent.
Liquidation is done under the control and direction of the court, upon proper cause that is shown to the court.
Judicial
Who will wind up? Under Judicial
The person appointed by the court.
Rights of Partners in case of Liquidation cause WITHOUT Contravention or Violation of the Partnership Agreement
- To have a partnership property applied to discharge the liabilities of the partnership.
- To have the surplus, if any, applied to pay in cash the net amount owing to the respective partners.
Rights of Partners in case of Liquidation cause WITH Contravention or Violation of the Partnership Agreement
- Rights of partner who has not caused dissolution wrongfully
- Rights of partner who wrongfully caused the dissolution
Rights of partner who has not caused dissolution wrongfully
- To have the partnership property applied to discharge the liabilities of the partnership.
- To have the surplus, if any, applied to pay in cash the net amount owing to the respective partner.
- To be indemnified for damages caused by the partner who caused the dissolution wrongfully.
- To continue the business in the same name either by themselves or jointly with others during the agreed term of the partnership and for that purpose may possess the partnership property.
Rights of partner who wrongfully caused the dissolution
- If the business is not continued by the other partners.
- If the business is continued by other partners.
If the business is continued by other partners.
a. To have the value of his interest in the partnership, less any damage caused to his co-partners by the dissolution, ascertained and paid to him in cash, or the payment secured by a bond approved by the court.
b. To be released from all existing and future liabilities of the partnership.
Where a partnership contract is rescinded on the ground of the fraud or misrepresentation of one of the parties thereto, the party entitled to rescind is, without prejudice to any other right, entitled:
(1) [Right of…] To a LIEN on, OR RIGHT OF RETENTION of, the surplus of the partnership property after satisfying the partnership liabilities to third persons for any sum of money paid by him for the purchase of an interest in the partnership and for any capital or advances contributed by him.
(2) [Right of Subrogation] To stand, after all liabilities to third persons have been satisfied, in the place of the creditors of the partnership for any payments made by him in respect of the partnership liabilities.
(3) [Right of Indemnification] To be indemnified by the person guilty of the fraud or making the representation against all debts and liabilities of the partnership.
In settling accounts between the partners after dissolution, the following rules shall be observed, subject to any agreement to the contrary:
(1) The assets of the partnership
(2) The liabilities of the partnership shall rank in order of payment
(3) The assets shall be applied in the order of their declaration in No. 1 of this article to the satisfaction of the liabilities
(4) The partners shall contribute, as provided by Article 1797, the amount necessary to satisfy the liabilities
(5) An assignee for the benefit of the creditor or any person appointed by the court shall have the right to enforce the contributions specified in the preceding number.
(6) Any partner or his legal representative shall have the right to enforce the contributions specified in No. 4, to the extent of the amount which he has paid in excess of his share of the liability.
(7) The individual property of a deceased partner shall be liable for the contributions specified in No. 4
(8) When partnership property and the individual properties of the partners are in possession of a court for distribution, partnership creditors shall have priority on partnership property and separate creditors on individual property, saving the rights of lien or secured creditors
(9) Where a partner has become insolvent or his estate is insolvent, the claims against his separate property shall rank in order.
The assets of the partnership are:
(a) The partnership property
(b) The contributions of the partners necessary for the payment of all the liabilities specified in No. 2
The liabilities of the partnership shall rank in order of payment, as follows:
(a) Those owing to partnership creditors other than partners
(b) Those owing to partners other than for capital and profits
(c) Those owing to partners in respect of capital = IP is not entitled
(d) Those owing to partners in respect of profits = IP is entitled
Required New Contribution
If the partnership assets were exhausted, the partners shall contribute the amount necessary to satisfy the liabilities.
Who can enforce? Under “Required New Contribution”
- An assignee for the benefit of creditors or any person appointed by the court shall have the right to enforce the contributions.
- Any partner or his legal representative shall have the right to implement the said enforced contributions, to the extent of the amount which he has paid in excess of his share of the liability.
Does Individual Property of a Deceased Partner is liable?
Yes, Individual Property of a Deceased Partner shall be liable for his share of the partnership liability incurred while he was a partner. His separate creditors have preference over theses individual properties.
When partnership property and the individual properties of the partners are in possession of a court for distribution…
Partnership creditors shall have priority on partnership property and separate creditors on individual property, saving the rights of lien or secured creditors.
Where a partner has become insolvent or his estate is insolvent, the claims against his separate property shall rank in the following order:
(a) Those owing to separate creditors
(b) Those owing to partnership creditors
(c) Those owing to partners by way of contribution
In the following cases, creditors of the dissolved partnership are also creditors of the person or partnership continuing the business:
(1) When any new partner is admitted into an existing partnership, or when any partner retires and assigns (or the representative of the deceased partner assigns) his rights in partnership property to two or more of the partners, or to one or more of the partners and one or more third persons, if the business is continued without liquidation of the partnership affairs
(2) When all but one partner retire and assign (or the representative of a deceased partner assigns) their rights in partnership property to the remaining partner, who continues the business without liquidation of partnership affairs, either alone or with others
(3) When any partner retires or dies and the business of the dissolved partnership is continued, with the consent of the retired partner or the representative of the deceased partner, but without any assignment of his right in partnership property
(4) When all the partners or their representatives assign their rights in partnership property to one or more third persons who promise to pay the debts and who continue the business of the dissolved partnership
(5) When any partner wrongfully causes a dissolution and the remaining partners continue the business, either alone or with others, and without liquidation of the partnership affairs
(6) When a partner is expelled and the remaining partners continue the business either alone or with others without liquidation of the partnership affairs.
Rights of Partner who Retires or Dies and the Business is Continued without Any Settlement of Accounts
- To have value of his interest at the date of dissolution ascertained
- To receive as an ordinary creditor, an amount equal to the value of his share in the dissolved partnership with interest, OR in lieu of interest, profits attributable to the use of his right.
Who has the right to an account of his interest?
The right to an account of his interest shall accrue to any partner, or his legal representative.
Who has an obligation to render an account?
- The winding up partners
- The surviving partners
- The person or partnership continuing the business
When to render an account?
At the date of dissolution, except of there is a stipulation to the contrary.
