Disassociation and Dissolution Flashcards
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?
Yes
Once formed, a limited liability partnership (LLP) is a general partnership for all purposes except:
for liability.
A partner’s power to dissociate—or withdraw—from a partnership is exercisable:
At any time; it is a non- waivable right of every partner (general or limited).
Can a general partner waive their right to disassociate/withdraw from the partnership?
Yes
Can a limited partner waive their right to disassociate/withdraw from the partnership?
Yes
For a partner to exercise his power to withdraw (disassociate) form the partnership he must:
Give notice of the partner’s express will to withdraw from the partnership.
Can a partner be liable for damages for a breach if he exercises his power to withdraw?
Yes
A partner who dissociates in violation of an express provision of partnership agreement:
does so wrongfully (breaches the agreement)
A partner who wrongfully dissociates is liable to the partnership and to the other partners for:
damages caused by the dissociation.
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:
going to be considered to have dissociated wrongfully.
What events cause a partnership’s disassociation?
- partner’s death
- partner’s bankruptcy
- the appointment of a guardian for a partner
- a judicial determination that a partner is incapable of performing the duties of a partner; or
- the occurrence of an event specified in the partnership as triggering a partner’s dissociation.
If the partnership is for a definite term or undertaking, dissociation by bankruptcy is:
Deemed wrongful and a partner who becomes bankrupt is liable for damages caused by his subsequent disassociation.
Is a partner who becomes bankrupt liable for damages caused by his subsequent dissociation?
Yes
Can disassociation occurr when someone is expelled from the partnership?
Yes (see detailed outline for more info–not heavily tested)
A partner may be expelled from a partnership pursuant to:
(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.
When a general partner withdraws from a limited partnership by express will, the partner dissociates wrongfully if:
it occurs before the termination of the limited partnership.
Does a limited partner have a right to dissociate before the termination of the limited partnership?
No
Do general partners of a limited partnership have the same right to dissociate as general partners of a general partnership?
No
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:
buy out the interest of the dissociated partner.
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.
90 days
In general, dissociation terminates a partner’s right to:
co-manage and conduct partnership business.
Except with respect to events or matters occurring before dissociation, dissociation also terminates:
a partner’s duty of loyalty and duty of care.
Is a partner who has dissociated permitted to compete with the partnership business?
Yes
Is a partner who dissociates does not thereby discharged of liability for partnership obligations incurred before the dissociation?
No
Can an individual partner file an application with a California court to have a partnership dissolved?
Yes
An application to dissolve a partnership will be granted if a court determines that:
- 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.
Does a partnership dissolve if it becomes illegal to operate it?
Yes
Generally, partnerships dissolve if:
- a judicial determination is made upon application by a partner,
- it becomes unlawful to carry on the partnership’s business, or
- upon the occurrence of an event specified in the partnership agreement.
In a partnership “at will”, dissolution will also occur when:
the partnership has notice of the express will to dissolve from at least half of the general partners.
In determining whether at least half of the partners expressed will to dissolve the partnership, the court will include:
Any partner who, in the preceding 90 days, rightfully dissociated by express will.
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:
Before that time a majority of the partners agree to continue the partnership.
In a partnership for a definite term or undertaking, if a partner dissociates by death or by bankruptcy, the partnership:
would dissolve after 90 days unless a majority of the remaining partners agree to continue the business.
Can unanimous consent dissassociate a partnership for a fixed term/venture?
Yes
Upon the withdrawal of its lone general partner, a limited partnership dissolves unless:
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.
If one of multiple general partners dissociates, the limited partnership will dissolve if:
within 90 days of the dissociation, a majority of the remaining partners (general and limited) consent to its dissolution.
A limited partnership dissolves upon the withdrawal of its sole limited partner unless:
another limited partner is admitted within 90 days.
Can a limited partnership be dissolved upon the happening of an event specified in the partnership agreement?
Yes
Can a limited partnership be dissolved upon the consent from all general partners and a majority of limited partners?
Yes
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?
Yes
Once dissolved, a partnership continues its existence only for:
the purpose only of winding up its business (discharging its debts and distributing its assets).
When the winding up of its business is complete:
the partnership terminates.
Who may participate in the winding up process?
Only general partners who have not dissociated may participate in the winding up process of a dissolved partnership.
In the winding up process, the partnership’s assets will be used to pay:
- Creditors, including, to the extent permitted by law, partners who are creditors
- Capital contributions to partners; and
- Allocate balance in accordance with profits
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:
jointly and severally liable for the entire amount of the outstanding debt.
To the extent partners pay more than their share of the outstanding debt, they may seek:
contribution from those partners who have not paid their share of the debt.
How do partners share in the surplus (or debts) after winding up a partnership?
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.
