Partnership Changes & Termination Flashcards
Dissolution - Order of Asset Discharge
Partnership assets, including contributions by partners to the partnership, are first applied to discharge partnership obligations to its creditors, including partners who are creditors of the partnership.
Each partner’s account must be adjusted to reflect profits and losses that result from the winding-up process. – EVEN IF IT MEANS ONE PARTNER ENDS UP OWING THE OTHER $
Dissolution by Judicial Decree
A partnership will be dissolved upon judicial decree if:
(i) the economic purpose of the partnership is likely to be frustrated;
(ii) a partner has engaged in conduct making it not reasonably practicable to carry on the business;
(iii) the business cannot be practicably carried on in conformity with the partnership agreement; and
(iv) upon application of a transferee of a partnership interest that it is equitable to wind up the business.
NOT PENDING BANKRUPTCY
