Chapter 3: Other Partnership Entitites

Question 1

What is a Registered Limited Liability Partnership

Answer 1

LLP provides some limited liability protections.

Can only sue and recover from the entity itself, provides all partners w/ limited liability, like shareholders in a corporation

Protects against personal liability and negligence of other partners: not against your own personal liability

Question 2

Formalities for an LLP

Answer 2

Must file an application w/ the state upon inception (or articles of conversion) and an annual report every year.

Must contain: Limited Liability Partnership, Registered Limited Liability Partnership or R.L.L.P.; L.L.P., RLLP, or LLP

Question 3

Limited Partnership

Answer 3

LP: at least one general partner and one limited partner

Must file a certificate of limited partnership. If not filed, but the purported limited partner believes in GF that he is a limited partner, he is only liable to a counterparty who has a GF belief that the person was the general partner.

Question 4

Limited partner v. General partner

Answer 4

Limited liability: to amount of contributions or express agreement to contribute a certain amount

Sometimes called silent partners, generally, no management rights

General partner: unlimited liability, personal liability for shortfall of debts

Question 5

LP Interest Allocations and Transfers

Answer 5

Profits and losses allocated per the partnership agreement.

Default rule: allocate profits and losses according to partners relative unreturned capital contributions

Limited partnership interest can be transferred: transferor no longer a partner, transferee generally only has economic rights

Question 6

Order of liquidation for LP

Answer 6

Partnership creditor (other than general partner)
Partnership creditor who is a general partner
Partners entitled to unpaid distributions previously due
Partners: first repay any capital contributions, then share distributions as they’ve agreed

Question 7

LP Derivative Actions

Answer 7

Limited partners may also bring a derivative action on behalf of the partnership if the general partners have refused to do so, or the action would be futile.

Must show either: demand on general partner or futility (asking GP to act would have been futile.