Liability during Winding Up

Question 1

Liability for old business during winding up

Answer 1

Partners retain liability on all transactions to satisfy creditors who existed at start of wind up

Question 2

Liability for new business?

Answer 2

Retain liability until actual notice of dissolution given to creditors or 90 days after filing statement of dissolution

Question 3

What is the order of priority for partnership creditors?

Answer 3

All outside and inside creditors first

Partners capital contributions (full repay)

Any profits left over shared equally

Question 4

What does partner receive after wind up?

Answer 4

Loans and capital PLUS share of profits MINUS share of losses

Question 5

What happens if the partnership is short on capital contributions ?

Answer 5

Partners must pay more money into the partnership to cover the loss to all partners