Disassociation and Dissolution

Question 1

Are rules for the dissociation of a general partner (in a general partnership) the same as the rules for dissociation of a general partner in a limited liability partnership?

Answer 1

Yes

Question 2

Once formed, a limited liability partnership (LLP) is a general partnership for all purposes except:

Answer 2

for liability.

Question 3

A partner’s power to dissociate—or withdraw—from a partnership is exercisable:

Answer 3

At any time; it is a non- waivable right of every partner (general or limited).

Question 4

Can a general partner waive their right to disassociate/withdraw from the partnership?

Answer 4

Yes

Question 5

Can a limited partner waive their right to disassociate/withdraw from the partnership?

Answer 5

Yes

Question 6

For a partner to exercise his power to withdraw (disassociate) form the partnership he must:

Answer 6

Give notice of the partner’s express will to withdraw from the partnership.

Question 7

Can a partner be liable for damages for a breach if he exercises his power to withdraw?

Answer 7

Yes

Question 8

A partner who dissociates in violation of an express provision of partnership agreement:

Answer 8

does so wrongfully (breaches the agreement)

Question 9

A partner who wrongfully dissociates is liable to the partnership and to the other partners for:

Answer 9

damages caused by the dissociation.

Question 10

Even in the absence of an express provision, a partner who withdraws by express will from a partnership that is for a definite term or undertaking is generally:

Answer 10

going to be considered to have dissociated wrongfully.

Question 11

What events cause a partnership’s disassociation?

Answer 11

1. partner’s death
2. partner’s bankruptcy
3. the appointment of a guardian for a partner
4. a judicial determination that a partner is incapable of performing the duties of a partner; or
5. the occurrence of an event specified in the partnership as triggering a partner’s dissociation.

Question 12

If the partnership is for a definite term or undertaking, dissociation by bankruptcy is:

Answer 12

Deemed wrongful and a partner who becomes bankrupt is liable for damages caused by his subsequent disassociation.

Question 13

Is a partner who becomes bankrupt liable for damages caused by his subsequent dissociation?

Answer 13

Yes

Question 14

Can disassociation occurr when someone is expelled from the partnership?

Answer 14

Yes (see detailed outline for more info–not heavily tested)

Question 15

A partner may be expelled from a partnership pursuant to:

Answer 15

(1) a provision in a partnership agreement,
(2) a unanimous vote of the other partners, or
(3) a judicial determination made upon application by another partner.

Question 16

When a general partner withdraws from a limited partnership by express will, the partner dissociates wrongfully if:

Answer 16

it occurs before the termination of the limited partnership.

Question 17

Does a limited partner have a right to dissociate before the termination of the limited partnership?

Answer 17

No

Question 18

Do general partners of a limited partnership have the same right to dissociate as general partners of a general partnership?

Answer 18

No

Question 19

If a partner dissociates from a general partnership and the remaining partners do not elect to wind up the partnership business within 90 days of the dissociation, the partnership must:

Answer 19

buy out the interest of the dissociated partner.

Question 20

If a partner dissociates from a general partnership and the remaining partners do not elect to wind up the partnership business within____days of the dissociation, the partnership must buy out the interest of the dissociated partner.

Answer 20

90 days

Question 21

In general, dissociation terminates a partner’s right to:

Answer 21

co-manage and conduct partnership business.

Question 22

Except with respect to events or matters occurring before dissociation, dissociation also terminates:

Answer 22

a partner’s duty of loyalty and duty of care.

Question 23

Is a partner who has dissociated permitted to compete with the partnership business?

Answer 23

Yes

Question 24

Is a partner who dissociates does not thereby discharged of liability for partnership obligations incurred before the dissociation?

Answer 24

No

Question 25

Can an individual partner file an application with a California court to have a partnership dissolved?

Answer 25

Yes

Question 26

An application to dissolve a partnership will be granted if a court determines that:

Answer 26

* the economic purpose of the partnership is: likely to be unreasonably frustrated; * the carrying on of the business in conformity with the partnership agreement would: not be reasonably practicable; OR * the carrying on of the business in partnership with a particular partner is: no longer reasonably practicable in light of that partner’s conduct relating to the partnership’s business.

Question 27

Does a partnership dissolve if it becomes illegal to operate it?

Answer 27

Yes

Question 28

Generally, partnerships dissolve if:

Answer 28

1. a judicial determination is made upon application by a partner, 2. it becomes unlawful to carry on the partnership’s business, or 3. upon the occurrence of an event specified in the partnership agreement.

Question 29

In a partnership "at will", dissolution will also occur when:

Answer 29

the partnership has notice of the express will to dissolve from at least half of the general partners.

Question 30

In determining whether at least half of the partners expressed will to dissolve the partnership, the court will include:

Answer 30

Any partner who, in the preceding 90 days, rightfully dissociated by express will.

Question 31

In a partnership for a definite term or particular undertaking, the partnership will dissolve 90 days after the wrongful dissociation of one of its partners UNLESS:

Answer 31

Before that time a majority of the partners agree to continue the partnership.

Question 32

In a partnership for a definite term or undertaking, if a partner dissociates by death or by bankruptcy, the partnership:

Answer 32

would dissolve after 90 days unless a majority of the remaining partners agree to continue the business.

Question 33

Can unanimous consent dissassociate a partnership for a fixed term/venture?

Answer 33

Yes

Question 34

Upon the withdrawal of its lone general partner, a limited partnership dissolves unless:

Answer 34

before 90 days passes a majority of the limited partners consent to continue the business and admit one or more general partners to replace the dissociating general partner.

Question 35

If one of multiple general partners dissociates, the limited partnership will dissolve if:

Answer 35

within 90 days of the dissociation, a majority of the remaining partners (general and limited) consent to its dissolution.

Question 36

A limited partnership dissolves upon the withdrawal of its sole limited partner unless:

Answer 36

another limited partner is admitted within 90 days.

Question 37

Can a limited partnership be dissolved upon the happening of an event specified in the partnership agreement?

Answer 37

Yes

Question 38

Can a limited partnership be dissolved upon the consent from all general partners and a majority of limited partners?

Answer 38

Yes

Question 39

Can a limited partnership be dissolved upon court order granting the application of a partner that it is not reasonably practicable to carry on the business in conformity with the partnership agreement?

Answer 39

Yes

Question 40

Once dissolved, a partnership continues its existence only for:

Answer 40

the purpose only of winding up its business (discharging its debts and distributing its assets).

Question 41

When the winding up of its business is complete:

Answer 41

the partnership terminates.

Question 42

Who may participate in the winding up process?

Answer 42

Only general partners who have not dissociated may participate in the winding up process of a dissolved partnership.

Question 43

In the winding up process, the partnership’s assets will be used to pay:

Answer 43

* Creditors, including, to the extent permitted by law, partners who are creditors * Capital contributions to partners; and * Allocate balance in accordance with profits

Question 44

In the winding up process, to the extent further contributions are required from the partners in order for the partnership to meet all its obligations, each partner will be:

Answer 44

jointly and severally liable for the entire amount of the outstanding debt.

Question 45

To the extent partners pay more than their share of the outstanding debt, they may seek:

Answer 45

contribution from those partners who have not paid their share of the debt.

Question 46

How do partners share in the surplus (or debts) after winding up a partnership?

Answer 46

Unless provided otherwise in the partnership agreement, in winding up a partnership, partners share equally in the surplus, if any, or otherwise share the outstanding debt in the same proportion as they would share in the surplus.