Limited Partnerships

Question 1

General

Answer 1

one or more general partners and one or more limited partners

General partner- liable for all obligations
Limited- liable only to make agreed upon contributions

Limited partnership is distinct from its partners and has perpetual duration

Question 2

Formation

Answer 2

filing and general partners specified

Must comply with statute- must file certificate

Question 3

Admission of partners

Answer 3

Can result by merger or conversion-consent of all partners

Question 4

Contribution

Answer 4

form of any benefit; obligations not excused by death; may be compromised only on the consent of all partners

Question 5

Liability

Answer 5

General- jointly and serverally liable - although not liable if the liability is incurred while an LLP- belongs to partnership alone

Limited Partner- not personally liable

Incoming partner- same as partnership

Question 6

Duties

Answer 6

General- fiduciary duty (care and loyalty)

Limited- no fiduciary duty- free to compete

Question 7

Rights of Partners

Answer 7

Right to distributions- same as corp- no distributions if partnership wouldn’t be able to pay its debts or the assets would be less than the liabilities (if improper- personally liable for amounts that exceed what could properly have been distributed; forced to return amount unless based on reasonable statements)

Right to assign- may be transfered but doesn’t give tranferee any rights; entire transfer is grounds for expulsion

Right to transaction business with partnership- may lend money to transaction with other LP’s

Right to dissolve- decree of dissolution- when it is not reasonably practicable

Direct action against LP by P- equitable relief to enforce rights

Derivative action- enforce rights of LP’s if: first demand is made on general partners and no action is brought; must be a partner at the time the action is commenced/conduct arose/status as a partner devolved from person who was a partner when conduct arose

Question 8

Rights specific to general partners

Answer 8

management rights- equal

Approval of ALL partners to: amend agreement; convert to different entity; dipose of property; admit a new partner; comprise a partner’s obligations

Right of information: similar to regular partnership

Indemnification- no renumeration but indemnified for expenses in ordinary course of business

Question 9

Rights specific to LP’s

Answer 9

Management- same as general - no liability

information- records

Question 10

Dissociation

Answer 10

Same as normal partnership-
LP- no right to dissociate before termination fo the LP

After dissociation- LP is treated as a transferee
General- same as in a partnership

Question 11

Dissolution and Distribution

Answer 11

Can happen when: impracticable, administratively (failing to pay fees); specified event; consent of all general and limited partners holding majority interest; dissociation of general partner; 90 days after dissociation of last LP

Question 12

Winding up

Answer 12

continues only for the purpose of winding up

Question 13

Power to bind

Answer 13

act appropriate for winding up or acts that would have bound partnership before winding up (general)

Question 14

Distribution of assets

Answer 14

Creditors, suplus- must be paid in cash as distributions

Question 15

Insufficient to satisfy debt

Answer 15

General - must contribute to satisfy obligations- in proportion to right to receive distributions

If additional payments are made- they may recover from any person who failed to pay