partnership: causes and effects of dissolution and dissociation

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Old May 14th, 2009, 07:37 AM   #1
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Confused partnership: causes and effects of dissolution and dissociation

What are the causes and effects of dissolution and dissociation?
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Old May 14th, 2009, 08:27 PM   #2
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Default re: partnership: causes and effects of dissolution and dissociation

Dissociation

A partner has the power to dissociate form the partnership at any time, such as by withdrawing from the partnership. However, a partner does not always have the right to dissociate

The change in the relationship caused by a partner's ceasing to be associated in the carrying on of the business. (Entirely new concept, introduced in the RUPA)

Dissociation of a partner does not necessarily cause a dissolution and winding up of the business of the partnership. (Under UPA Section 29, a partnership is dissolved every time a partner leaves.)

A partner is dissociated from a partnership upon the occurrence of any of the following
events:
1. Notice of the partner's express will to withdraw
2. Occurrence of agreed upon event
3. Expulsion pursuant to the partnership agreement
4. Expulsion by the unanimous vote of the other partners if:
(i) it is unlawful to carry on the partnership business with that partner;
(ii) there has been a transfer of all or substantially all of that partner's transferable interest in the partnership (iii) corporate partner has been dissolved (iv) a partnership that is a partner has been dissolved
5. Partner's expulsion by judicial determination because of wrongful conduct, material breach of the partnership agreement, conduct which makes it not reasonably practicable to carry on the business in partnership with the partner
6. The partner's, becoming a debtor in bankruptcy; executing an assignment for the benefit of creditors; appointment of a trustee, receiver, or liquidator
7. The partner's death; the appointment of a guardian or general conservator for the partner; or a judicial determination that the partner has otherwise become incapable of performing the partner's duties


A partner's dissociation is wrongful only if:
(1) it is in breach of an express provision of the partnership agreement; or
(2) in the case of a partnership for a definite term or particular undertaking, before the expiration of the term or the completion of the undertaking:
(i) the partner withdraws by express will,
(ii) the partner is expelled by judicial determination
iii) the partner is dissociated by becoming a debtor in bankruptcy or
(iv) the partner is expelled or otherwise dissociated because it willfully dissolved or terminated.
A partner who wrongfully dissociates is liable to the partnership and to the other partners for damages caused by the dissociation.

Upon a partner's dissociation:
(1) the partner's right to participate in the management and conduct of the partnership business terminates, except as otherwise provided in Section 803;
(2) the partner's duty of loyalty under Section 404(b)(3) terminates (competing with the partnership); and(3) the partner's duty of loyalty under Section 404(b)(1) and (2) and duty of care under Section 404(c) continue only with regard to matters arising and events occurring before the partner's dissociation, unless the partner participates in winding up the partnership's business pursuant to Section 803.

"Dissolution" is the commencement of the winding up process.

The partnership continues for the limited purpose of winding up the business.

Winding up the partnership business entails selling its assets, paying its debts, and distributing the net balance, if any, to the partners in cash according to their interests.

When the winding up is completed, the partnership entity terminates.

Dissolution and Winding Up

"Dissolution" is the commencement of the winding up process.

The partnership continues for the limited purpose of winding up the business.

Winding up the partnership business entails selling its assets, paying its debts, and distributing the net balance, if any, to the partners in cash according to their interests.

When the winding up is completed, the partnership entity terminates.

After a partner's dissociation
The partner's interest in the partnership must be purchased pursuant to the buyout rules in Article 7
or
Dissolution and winding up of the partnership business occurs under Article 8.
A partner's dissociation will always result in either a buyout of the dissociated partner's interest or a dissolution and winding up of the business.

Read more:
http://www35.homepage.villanova.edu/...nding%20Up.ppt


See also...

Illinois 805 ILCS 180/ Limited Liability Company Act.
Article 35 - Dissolution And Dissociation
Article 35 - Dissolution And Dissociation - Illinois 805*ILCS*180/******Limited Liability Company Act. - Illinois Code :: Justia


The Law of Corporations and Other Business Organizations By Angela Schneeman
The Law of Corporations and Other ... - Google Book Search
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Old May 15th, 2009, 01:38 PM   #3
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Default re: partnership: causes and effects of dissolution and dissociation

Helpful, thanks!!!

I am going to the paid ask a lawyer here for some private info/questions.
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