Termination of Partnership and Partnership Changes

Question 1

Dissolution

Answer 1

Dissolution triggered by event, partnership not terminated until business completely wound up.

Events causing dissolution:

• in partnership for indefinite term, when partner chooses to disassociate from partnership by giving notice.
• in partnership for definite term, there is death, bankruptcy, other event and half partners don’t agree to continue on with partnership, when partners agree to dissolution, or when partnership agreement term expires. (if partnership continues, presumed agreement to continue business and partnership is now partnership at will.)

Any partnership for definite, is dissolved upon f:

• events agreed to at partnership agreement
• events make it unlawful for all or substantially all of partnership business to be continued,
• judicial determination is sought by transferree of a partner’s interest.

Question 2

Winding Up

Answer 2

After dissolution, partnership only exists for purposes of wind up the business.

Any partner not wrongfully disassociated can participate in winding up business. Any partner can seek supervision of the winding up.

Person winding up may dispose or transfer any partnership property, discharge liabilities, distribute assets of the partnership to settle partner’s accounts.

partners and partnership liable for acts occurring during wind up phase.

• parthersnip bound by acts that are necesary for dissolution as well as for acts that would have bound the partnership so long as the 3d party does nto have notice that there is a wind up occurring.
• each partner liable for his share of the partnership liability.

Any partner other than one who has wrongfully dissociated can file a statment of dissolution whic gives otcie of the dissolution and limits the liability to 90 days after filing.

Creditors are always first in line. Remaining assets distributed to the partners.
*if not enough assets to satisfy creditors, partners must contribute amount necessary.

After dissolutio but before complete winding up, partnership to continue the business so lon as all partners agreet o waive right of termination.

Question 3

Mergers

Answer 3

Partnership combines into another entity, leaving on ly one surviving entity.

Requires approval by all the general partners in a general partnership.
If limited partnership, merger approval must come from all of the general partners and the majority of the limited partnership interests.

Requires articles of merger. once filed, merger in effect.

Person’s status post-merger will not impact her liability for things that happened pre-merger.

General that becomes limited partner will still be liable as a general partner for obligations incurred prior to the change.

LImited partner who becomes a general partner still shieled from liability for things that occurred prior to the change.

Question 4

Conversions

Answer 4

Treated like formations.

Conversion one entity converting into another type of entity.

Rules of formation must be followed.

Decision to convert must be approved by the partners.
in general partnership must be approved by all of the general partners.

in other forms of parnerships, generally need vote of all of the general partners and a majority of the limited partnership interest.