Is a limited partnership treated as a separate entity for all purposes? If not, give an example of an instance in which a limited partnership is treated as an aggregate of its partners.
No, they are not always considered separate entities when dealing with substantive liabilities and duties of the partners, the limited partnership is considered an aggregate of the individual partners.
Why is the fiduciary duty between the general partner and limited partners even greater than the fiduciary duty between partners in a general partnership?
Because the general partner holds majority of the interest and the limited partners are prohibited for participating in the control of the business.
Suppose that Beth Henderson is a limited partner of the ABC Limited Partnership, a limited partnership formed for the purpose of purchasing and developing real estate. Beth wanted to be a limited partner because she has considerable personal assets that she wants to protect. Soon after the formation of the limited partnership, Beth becomes concerned about its management by the general partners.
She starts attending the general partners’ meetings and participating in all major decisions concerning the limited partnership. However, the partnership becomes insolvent anyway. Creditors are left with thousands of dollars’ worth of unpaid bills. The limited partnership and the general partners have no substantial cash or other assets. If the partnership is in a state that follows RULPA, might creditor prevail in a lawsuit against Beth Henderson personally to recover their losses? Why or why not?
Yes, because she attended the general partners’ meetings and participated in all major decisions concerning the limited partnership which caused her to lose her limited liability partner status.
Brian, Jeanne, and William have formed Oak Ridge Limited Partnership, a limited partnership for shopping center development and management. William is the general partner and Brian and Jeanne are limited partners. The limited partnership is about to enter into an agreement to purchase a new shopping center; however, the bank that is lending them the money wants personal guarantees from each partner.
If the limited partnership is governed by the laws of a state that follows the Revised Uniform Limited Partnership Act, would Brian and Jeanne be able to guarantee the obligation of the Oak Ridge Limited Partnership without risking their limited liability status? Yes they would because under the activities set forth in the safe harbor provisions of the Revised Uniform Limited Partnership Act. They would, of course be personally liable for the bank loan to the extent agreed upon in their a personal guarantees.
Suppose that Jake, Bryan, and Jill decide to form a limited partnership for the purpose of owning and operating a liquor store. They are all concerned about their personal liability, so they decide that they will all be limited partners. Would this be possible? Why or why not? What if Jill agreed to be both a general partner and a limited partner?
No, because all limited partnership must have at least one general partner and one limited partner. Jill could be both a general and limited partner but she would not get any additional profits and her contributions would be limited and protected for debtors. . Why might a limited partnership want to put only the minimum required information in the limited partnership certificate and go into more detail in the limited partnership agreement or other documents? The full partnership agreement of the partners are not kept on public record.
What is one advantage the limited partnership has over the general partnership with regard to raising capital for the business?
By attracting passive investors and by adding additional new limited partners.
Who may initiate a derivative action?
A derivative action is brought by a shareholder to enforce a claim of the corporation or by a limited partner in the right of a limited partnership to recover judgment in its favor.
Suppose that Katherine, Brianna, and Paige have formed a limited partnership to operate a video arcade. Katherine is the general partner. She has contributed $2,000 and her time to get the operation running. Brianna and Paige, the limited partners, have each contributed $3,000.
After one year of operation, the arcade has debts of $10,000, and the three partners decide to discontinue their business and the limited partnership. Brianna and Paige want their investment returned to them. Who should Katherine, who is winding up the business, pay first, Brianna and Paige, or the creditors? How much will Brianna and Paige receive? How about Katherine? Katherine is winding up the business, she should pay the creditors first and Brianna and Paige will be compensated for their contribution and partnership interest. Katherine would get the remaining balance if there is any.
Suppose a limited partnership has just one general partner, who suddenly dies. Will the partnership dissolve? Could a limited partnership continue if one of three general partners suddenly dies? If yes, under what circumstances?
Yes, it is not always necessary for limited partnerships to dissolve if one general partner dies as long as there is one other general partner. If there is provisions of the partnership agreement permit the business of the limited partnership to be carried on by the remaining general partner, and that partner does so.
How do limited liability partnerships differ from general partnerships?
Limited liability partnership is when partners have less than full liability for the actions of other partners, but full liability for their own actions. The general partnership is typical and which all partners are general partners which have co ownership, two more persons, for profit.
Where in the state statutes is law governing limited liability partnerships generally found?
They are found in state statues, codes, etc. RULPA or uniform limited partnership act (pg 198). a. Like in MO, it’s the Missouri Revised
In states that follow the RUPA (1997), what information must be included in a statement of qualification to elect limited liability partnership statutes?
Under the UPA (1997) and the laws of most states, the same number of partners required to approve an amendment to the partnership agreement must vote to approve the limited liability partnership election.Info that must be included in the Statement of Qualification is the name of the partnership, street address of the partnership’s chief executive office and if different, the street address of an office in this state, if any, also designated agent for service of process, statement regarding limited liability status .
Why do some states require limited liability partnerships to maintain liability insurance?
Yes some states require liability insurance for limited liability partnership to cover the partnership for errors, omissions, negligence, wrongful acts, misconduct, and malpractice.This requirement ensures that third parties who are wronged by the LLP will have some type of recourse if the LLP itself has limited assets
What is the difference between partial shield statutes and full shield statutes?
States statues that dictate how much personal liability protection partners have are generally referred as this. Partial shield statues are laws designed to protect individual partners from incurring personal liability for partnership debts and obligations arising specifically from the negligence and wrongdoing of other partners.Full shield statues are laws that provide that obligations of the partnership belong solely to the partnership and that partners are not personally liable for any partnership obligation .
If a partnership formed in a partial shield state has a judgment filed against it for a $10,000 debt arising from the embezzlement of funds by one partner, who will be responsible for paying the partnership debt once the partnership assets have been exhausted?
The partner who embezzled the funds because according to the partial shield statue, it protects individual partners from incurring personal liability for partnership debts and obligations arising due to the partner’s wrongdoing.
Why might a limited liability partnership be a good choice of entity for a law firm partnership?
Limited liability Limited Partnership is not a good idea if the business will operate in several states because it will be considered a foreign LLP in any state other than its state of domicile.Foreign LLP’s are required to file annual reports in most states in which they are qualified. Filing fees will be requested, and etc… too much hassle
Why might a limited liability limited partnership be a poor choice of entity for a business that operates in several states?
Uniform Limited Partnership Act 2001 state that the general partners of an LLLP have the same full liability shield granted to partners in an LLP. a. An obligation of a limited partnership incurred while the limited artnership is a limited liability partnership, whether arising in contract, tort, or otherwise is solely the obligation of the limited partnership. A general partner is not personally liable, directly or indirectly. b. As with LLP’s a general partners has no shield from liability for LLLP obligations arising due to his or her own wrongdoing.
What are the advantages to doing business as a limited liability limited partnership as opposed to a limited partnership?
In states that follow the ULPA (2001), how is an election made to form a limited liability limited partnership?
