Terminating a partnership

Question 1

Two steps of partnership termination

Answer 1

1) dissolution
2) winding up

Question 2

When may dissolution occur, what does it mean, and what two sources can cause?

Answer 2

Triggered by EVENT

“beginning of the end” of partnership

Can be brought about by partner OR operation of law

Question 3

Partnership for term or undertaking

Answer 3

Partnership may be dissolved when term expires or when undertaking is complete

Question 4

Partnership at Will

Answer 4

Open-ended partnership with no fixed term

Question 5

Three ways to dissolve either type of partnership

Answer 5

1) Any dissolving event set forth in agreement
2) Any event that makes it unlawful to continue if not cured within 90 days
3) judicial determination

Question 6

Who may wind up?

Answer 6

1) a partner that has NOT been wrongfully dissociated
2) a legal representative of last surviving partner
3) partner/legal rep/transferee may seek JUDICIAL SUPERVISION

Question 7

What powers does person winding up have?

Answer 7

-power to dispose of and transfer partnership property
-power to discharge liabilities
-can preserve partnership to maximize value

Question 8

Statement of dissolution purpose and timing

Answer 8

Purpose: gives notice to third parties of dissolution, limits partners’ authority and liability

Timing: Must inform third parties within 90 days AFTER dissolution

Question 9

Priority of distributions from terminating partnership

Answer 9

1) creditors
2) partners