Partnerships 11-14

Question 1

When can a judgment creditor levy execution of a judgment against a partner’s personal assets for a partnership debt?

Answer 1

When a judgment has been rendered against the partner;
AND

The partnership assets have been exhausted or are insufficient.

*A judgment against the partnership is NOT itself a judgment against the individual partners.

Priority: HIGH

Question 2

Who is responsible for an obligation incurred by a Limited Liability Partnership (LLP)?

Answer 2

The obligation is SOLEY the obligation of the LLP.

*Under RUPA, a partner in an LLP is NOT liable for partnership obligations.

Priority: Medium

Question 3

What are the three exceptions in which Limited Partners ARE personally liable for the obligations of the Limited Liability Partnership (LLP)?

Answer 3

They are ALWAYS liable for their own misconduct (or if they sign a PERSONAL guarantee).

Always at risk for losing any capital contributions made to the partnership.

Obligations incurred before the partnership became a LLP are treated as obligations of the prior entity. (i.e. general or limited partnership).

Priority: Medium

Question 4

What aspects of Partnership Ownership can be transferred to another?

Answer 4

The interest in the share of the profits and losses;
AND

The right to receive distributions.

*ALL other incidents of partnership ownership CANNOT be transferred (unless all partners agree or an agreement states otherwise).

Priority: Low