15905.01. A contribution of a partner may consist of tangible or
intangible property or other benefit to the limited partnership,
including money, services performed, promissory notes, other
agreements to contribute cash or property, and contracts for services
to be performed.
15905.02. (a) A partner's obligation to contribute money or other
property or other benefit to, or to perform services for, a limited
partnership is not excused by the partner's death, disability, or
other inability to perform personally.
(b) If a partner does not make a promised nonmonetary
contribution, the partner is obligated at the option of the limited
partnership to contribute money equal to the value of that portion,
as stated in the required information, of the stated contribution
which has not been made.
(c) The obligation of a partner to make a contribution or return
money or other property paid or distributed in violation of this
chapter may be compromised only by consent of all partners. A
creditor of a limited partnership which extends credit or otherwise
acts in reliance on an obligation described in subdivision (a),
without notice of any compromise under this subdivision, may enforce
the original obligation.
(d) A partnership agreement may provide that the interest of a
partner who fails to make any contribution or other payment that the
partner is required to make will be subject to specific remedies for,
or specific consequences of, the failure. A provision shall be
enforceable in accordance with its terms unless the partner seeking
to invalidate the provision establishes that the provision was
unreasonable under the circumstances existing at the time the
agreement was made. The specific remedies or consequences may include
loss of voting, approval, or other rights, loss of the partner's
ability to actively participate in the management and operations of
the partnership, liquidated damages, or a reduction of the defaulting
partner's economic rights. The reduction of the defaulting partner's
economic rights may include one or more of the following provisions:
(1) Diluting, reducing or eliminating the defaulting partner's
proportionate interest in the partnership.
(2) Subordinating the defaulting partner's interest in the
partnership to that of nondefaulting partners.
(3) Permitting a forced sale of the partnership interest.
(4) Permitting the lending or contribution by other partners of
the amount necessary to meet the defaulting partner's commitment.
(5) Adjusting the interest rates or other rates of return,
preferred, priority, or otherwise, with respect to contributions by
or capital accounts of the other partners.
(6) Fixing the value of the defaulting partner's interest in the
partnership by appraisal, formula and redemption, or sale of the
defaulting partner's interest in the partnership at a percentage of
that value.
(7) Nothing in this section shall be construed to affect the
rights of third-party creditors of the partnership to seek equitable
remedies nor any rights existing under the Uniform Fraudulent
Transfer Act (Chapter 1 (commencing with Section 3439) of Title 2 of
Part 2 of Division 4 of the Civil Code).
15905.03. A distribution by a limited partnership must be shared
among the partners on the basis of the value, as stated in the
required records when the limited partnership decides to make the
distribution, of the contributions the limited partnership has
received from each partner.
15905.035. The profits and losses of a limited partnership shall be
allocated among the partners in the manner provided in the
partnership agreement. If the partnership agreement does not
otherwise provide, profits and losses shall be allocated in the same
manner as the partners share distributions.
15905.04. A partner does not have a right to any distribution
before the dissolution and winding up of the limited partnership
unless the limited partnership decides to make an interim
distribution.
15905.05. A person does not have a right to receive a distribution
on account of dissociation.
15905.06. A partner does not have a right to demand or receive any
distribution from a limited partnership in any form other than cash.
Subject to subdivision (b) of Section 15908.09, a limited partnership
may distribute an asset in kind to the extent each partner receives
a percentage of the asset equal to the partner's share of
distributions.
15905.07. When a partner or transferee becomes entitled to receive
a distribution, the partner or transferee has the status of, and is
entitled to all remedies available to, a creditor of the limited
partnership with respect to the distribution. However, the limited
partnership's obligation to make a distribution is subject to offset
for any amount owed to the limited partnership by the partner or
dissociated partner on whose account the distribution is made.
15905.08. (a) A limited partnership may not make a distribution in
violation of the partnership agreement.
(b) A limited partnership may not make a distribution if after the
distribution:
(1) the limited partnership would not be able to pay its debts as
they become due in the ordinary course of the limited partnership's
activities; or
(2) the limited partnership's total assets would be less than the
sum of its total liabilities plus the amount that would be needed, if
the limited partnership were to be dissolved, wound up, and
terminated at the time of the distribution, to satisfy the
preferential rights upon dissolution, winding up, and termination of
partners whose preferential rights are superior to those of persons
receiving the distribution.
(c) A limited partnership may base a determination that a
distribution is not prohibited under subdivision (b) on financial
statements prepared on the basis of accounting practices and
principles that are reasonable in the circumstances or on a fair
valuation or other method that is reasonable in the circumstances.
(d) Except as otherwise provided in subdivision (g), the effect of
a distribution under subdivision (b) is measured:
(1) in the case of distribution by purchase, redemption, or other
acquisition of a transferable interest in the limited partnership, as
of the date money or other property is transferred or debt incurred
by the limited partnership; and
(2) in all other cases, as of the date:
(A) the distribution is authorized, if the payment occurs within
120 days after that date; or
(B) the payment is made, if payment occurs more than l20 days
after the distribution is authorized.
(e) A limited partnership's indebtedness to a partner incurred by
reason of a distribution made in accordance with this section is at
parity with the limited partnership's indebtedness to its general
unsecured creditors.
(f) A limited partnership's indebtedness, including indebtedness
issued in connection with or as part of a distribution, is not
considered a liability for purposes of subdivision (b) if the terms
of the indebtedness provide that payment of principal and interest
are made only to the extent that a distribution could then be made to
partners under this section.
(g) If indebtedness is issued as a distribution, each payment of
principal or interest on the indebtedness is treated as a
distribution, the effect of which is measured on the date the payment
is made.
15905.09. (a) A general partner that consents to a distribution
made in violation of Section 15905.08 is personally liable to the
limited partnership for the amount of the distribution which exceeds
the amount that could have been distributed without the violation if
it is established that in consenting to the distribution the general
partner failed to comply with Section 15904.08.
(b) A partner or transferee that received a distribution knowing
that the distribution to that partner or transferee was made in
violation of Section 15905.08 is personally liable to the limited
partnership but only to the extent that the distribution received by
the partner or transferee exceeded the amount that could have been
properly paid under Section 15905.08.
(c) A general partner against which an action is commenced under
subdivision (a) may:
(1) implead in the action any other person that is liable under
subdivision (a) and compel contribution from the person; and
(2) implead in the action any person that received a distribution
in violation of subdivision (b) and compel contribution from the
person in the amount the person received in violation of subdivision
(b).
(d) An action under this section is barred if it is not commenced
within four years after the distribution.
15905.01. A contribution of a partner may consist of tangible or
intangible property or other benefit to the limited partnership,
including money, services performed, promissory notes, other
agreements to contribute cash or property, and contracts for services
to be performed.
15905.02. (a) A partner's obligation to contribute money or other
property or other benefit to, or to perform services for, a limited
partnership is not excused by the partner's death, disability, or
other inability to perform personally.
(b) If a partner does not make a promised nonmonetary
contribution, the partner is obligated at the option of the limited
partnership to contribute money equal to the value of that portion,
as stated in the required information, of the stated contribution
which has not been made.
(c) The obligation of a partner to make a contribution or return
money or other property paid or distributed in violation of this
chapter may be compromised only by consent of all partners. A
creditor of a limited partnership which extends credit or otherwise
acts in reliance on an obligation described in subdivision (a),
without notice of any compromise under this subdivision, may enforce
the original obligation.
(d) A partnership agreement may provide that the interest of a
partner who fails to make any contribution or other payment that the
partner is required to make will be subject to specific remedies for,
or specific consequences of, the failure. A provision shall be
enforceable in accordance with its terms unless the partner seeking
to invalidate the provision establishes that the provision was
unreasonable under the circumstances existing at the time the
agreement was made. The specific remedies or consequences may include
loss of voting, approval, or other rights, loss of the partner's
ability to actively participate in the management and operations of
the partnership, liquidated damages, or a reduction of the defaulting
partner's economic rights. The reduction of the defaulting partner's
economic rights may include one or more of the following provisions:
(1) Diluting, reducing or eliminating the defaulting partner's
proportionate interest in the partnership.
(2) Subordinating the defaulting partner's interest in the
partnership to that of nondefaulting partners.
(3) Permitting a forced sale of the partnership interest.
(4) Permitting the lending or contribution by other partners of
the amount necessary to meet the defaulting partner's commitment.
(5) Adjusting the interest rates or other rates of return,
preferred, priority, or otherwise, with respect to contributions by
or capital accounts of the other partners.
(6) Fixing the value of the defaulting partner's interest in the
partnership by appraisal, formula and redemption, or sale of the
defaulting partner's interest in the partnership at a percentage of
that value.
(7) Nothing in this section shall be construed to affect the
rights of third-party creditors of the partnership to seek equitable
remedies nor any rights existing under the Uniform Fraudulent
Transfer Act (Chapter 1 (commencing with Section 3439) of Title 2 of
Part 2 of Division 4 of the Civil Code).
15905.03. A distribution by a limited partnership must be shared
among the partners on the basis of the value, as stated in the
required records when the limited partnership decides to make the
distribution, of the contributions the limited partnership has
received from each partner.
15905.035. The profits and losses of a limited partnership shall be
allocated among the partners in the manner provided in the
partnership agreement. If the partnership agreement does not
otherwise provide, profits and losses shall be allocated in the same
manner as the partners share distributions.
15905.04. A partner does not have a right to any distribution
before the dissolution and winding up of the limited partnership
unless the limited partnership decides to make an interim
distribution.
15905.05. A person does not have a right to receive a distribution
on account of dissociation.
15905.06. A partner does not have a right to demand or receive any
distribution from a limited partnership in any form other than cash.
Subject to subdivision (b) of Section 15908.09, a limited partnership
may distribute an asset in kind to the extent each partner receives
a percentage of the asset equal to the partner's share of
distributions.
15905.07. When a partner or transferee becomes entitled to receive
a distribution, the partner or transferee has the status of, and is
entitled to all remedies available to, a creditor of the limited
partnership with respect to the distribution. However, the limited
partnership's obligation to make a distribution is subject to offset
for any amount owed to the limited partnership by the partner or
dissociated partner on whose account the distribution is made.
15905.08. (a) A limited partnership may not make a distribution in
violation of the partnership agreement.
(b) A limited partnership may not make a distribution if after the
distribution:
(1) the limited partnership would not be able to pay its debts as
they become due in the ordinary course of the limited partnership's
activities; or
(2) the limited partnership's total assets would be less than the
sum of its total liabilities plus the amount that would be needed, if
the limited partnership were to be dissolved, wound up, and
terminated at the time of the distribution, to satisfy the
preferential rights upon dissolution, winding up, and termination of
partners whose preferential rights are superior to those of persons
receiving the distribution.
(c) A limited partnership may base a determination that a
distribution is not prohibited under subdivision (b) on financial
statements prepared on the basis of accounting practices and
principles that are reasonable in the circumstances or on a fair
valuation or other method that is reasonable in the circumstances.
(d) Except as otherwise provided in subdivision (g), the effect of
a distribution under subdivision (b) is measured:
(1) in the case of distribution by purchase, redemption, or other
acquisition of a transferable interest in the limited partnership, as
of the date money or other property is transferred or debt incurred
by the limited partnership; and
(2) in all other cases, as of the date:
(A) the distribution is authorized, if the payment occurs within
120 days after that date; or
(B) the payment is made, if payment occurs more than l20 days
after the distribution is authorized.
(e) A limited partnership's indebtedness to a partner incurred by
reason of a distribution made in accordance with this section is at
parity with the limited partnership's indebtedness to its general
unsecured creditors.
(f) A limited partnership's indebtedness, including indebtedness
issued in connection with or as part of a distribution, is not
considered a liability for purposes of subdivision (b) if the terms
of the indebtedness provide that payment of principal and interest
are made only to the extent that a distribution could then be made to
partners under this section.
(g) If indebtedness is issued as a distribution, each payment of
principal or interest on the indebtedness is treated as a
distribution, the effect of which is measured on the date the payment
is made.
15905.09. (a) A general partner that consents to a distribution
made in violation of Section 15905.08 is personally liable to the
limited partnership for the amount of the distribution which exceeds
the amount that could have been distributed without the violation if
it is established that in consenting to the distribution the general
partner failed to comply with Section 15904.08.
(b) A partner or transferee that received a distribution knowing
that the distribution to that partner or transferee was made in
violation of Section 15905.08 is personally liable to the limited
partnership but only to the extent that the distribution received by
the partner or transferee exceeded the amount that could have been
properly paid under Section 15905.08.
(c) A general partner against which an action is commenced under
subdivision (a) may:
(1) implead in the action any other person that is liable under
subdivision (a) and compel contribution from the person; and
(2) implead in the action any person that received a distribution
in violation of subdivision (b) and compel contribution from the
person in the amount the person received in violation of subdivision
(b).
(d) An action under this section is barred if it is not commenced
within four years after the distribution.
15905.01. A contribution of a partner may consist of tangible or
intangible property or other benefit to the limited partnership,
including money, services performed, promissory notes, other
agreements to contribute cash or property, and contracts for services
to be performed.
15905.02. (a) A partner's obligation to contribute money or other
property or other benefit to, or to perform services for, a limited
partnership is not excused by the partner's death, disability, or
other inability to perform personally.
(b) If a partner does not make a promised nonmonetary
contribution, the partner is obligated at the option of the limited
partnership to contribute money equal to the value of that portion,
as stated in the required information, of the stated contribution
which has not been made.
(c) The obligation of a partner to make a contribution or return
money or other property paid or distributed in violation of this
chapter may be compromised only by consent of all partners. A
creditor of a limited partnership which extends credit or otherwise
acts in reliance on an obligation described in subdivision (a),
without notice of any compromise under this subdivision, may enforce
the original obligation.
(d) A partnership agreement may provide that the interest of a
partner who fails to make any contribution or other payment that the
partner is required to make will be subject to specific remedies for,
or specific consequences of, the failure. A provision shall be
enforceable in accordance with its terms unless the partner seeking
to invalidate the provision establishes that the provision was
unreasonable under the circumstances existing at the time the
agreement was made. The specific remedies or consequences may include
loss of voting, approval, or other rights, loss of the partner's
ability to actively participate in the management and operations of
the partnership, liquidated damages, or a reduction of the defaulting
partner's economic rights. The reduction of the defaulting partner's
economic rights may include one or more of the following provisions:
(1) Diluting, reducing or eliminating the defaulting partner's
proportionate interest in the partnership.
(2) Subordinating the defaulting partner's interest in the
partnership to that of nondefaulting partners.
(3) Permitting a forced sale of the partnership interest.
(4) Permitting the lending or contribution by other partners of
the amount necessary to meet the defaulting partner's commitment.
(5) Adjusting the interest rates or other rates of return,
preferred, priority, or otherwise, with respect to contributions by
or capital accounts of the other partners.
(6) Fixing the value of the defaulting partner's interest in the
partnership by appraisal, formula and redemption, or sale of the
defaulting partner's interest in the partnership at a percentage of
that value.
(7) Nothing in this section shall be construed to affect the
rights of third-party creditors of the partnership to seek equitable
remedies nor any rights existing under the Uniform Fraudulent
Transfer Act (Chapter 1 (commencing with Section 3439) of Title 2 of
Part 2 of Division 4 of the Civil Code).
15905.03. A distribution by a limited partnership must be shared
among the partners on the basis of the value, as stated in the
required records when the limited partnership decides to make the
distribution, of the contributions the limited partnership has
received from each partner.
15905.035. The profits and losses of a limited partnership shall be
allocated among the partners in the manner provided in the
partnership agreement. If the partnership agreement does not
otherwise provide, profits and losses shall be allocated in the same
manner as the partners share distributions.
15905.04. A partner does not have a right to any distribution
before the dissolution and winding up of the limited partnership
unless the limited partnership decides to make an interim
distribution.
15905.05. A person does not have a right to receive a distribution
on account of dissociation.
15905.06. A partner does not have a right to demand or receive any
distribution from a limited partnership in any form other than cash.
Subject to subdivision (b) of Section 15908.09, a limited partnership
may distribute an asset in kind to the extent each partner receives
a percentage of the asset equal to the partner's share of
distributions.
15905.07. When a partner or transferee becomes entitled to receive
a distribution, the partner or transferee has the status of, and is
entitled to all remedies available to, a creditor of the limited
partnership with respect to the distribution. However, the limited
partnership's obligation to make a distribution is subject to offset
for any amount owed to the limited partnership by the partner or
dissociated partner on whose account the distribution is made.
15905.08. (a) A limited partnership may not make a distribution in
violation of the partnership agreement.
(b) A limited partnership may not make a distribution if after the
distribution:
(1) the limited partnership would not be able to pay its debts as
they become due in the ordinary course of the limited partnership's
activities; or
(2) the limited partnership's total assets would be less than the
sum of its total liabilities plus the amount that would be needed, if
the limited partnership were to be dissolved, wound up, and
terminated at the time of the distribution, to satisfy the
preferential rights upon dissolution, winding up, and termination of
partners whose preferential rights are superior to those of persons
receiving the distribution.
(c) A limited partnership may base a determination that a
distribution is not prohibited under subdivision (b) on financial
statements prepared on the basis of accounting practices and
principles that are reasonable in the circumstances or on a fair
valuation or other method that is reasonable in the circumstances.
(d) Except as otherwise provided in subdivision (g), the effect of
a distribution under subdivision (b) is measured:
(1) in the case of distribution by purchase, redemption, or other
acquisition of a transferable interest in the limited partnership, as
of the date money or other property is transferred or debt incurred
by the limited partnership; and
(2) in all other cases, as of the date:
(A) the distribution is authorized, if the payment occurs within
120 days after that date; or
(B) the payment is made, if payment occurs more than l20 days
after the distribution is authorized.
(e) A limited partnership's indebtedness to a partner incurred by
reason of a distribution made in accordance with this section is at
parity with the limited partnership's indebtedness to its general
unsecured creditors.
(f) A limited partnership's indebtedness, including indebtedness
issued in connection with or as part of a distribution, is not
considered a liability for purposes of subdivision (b) if the terms
of the indebtedness provide that payment of principal and interest
are made only to the extent that a distribution could then be made to
partners under this section.
(g) If indebtedness is issued as a distribution, each payment of
principal or interest on the indebtedness is treated as a
distribution, the effect of which is measured on the date the payment
is made.
15905.09. (a) A general partner that consents to a distribution
made in violation of Section 15905.08 is personally liable to the
limited partnership for the amount of the distribution which exceeds
the amount that could have been distributed without the violation if
it is established that in consenting to the distribution the general
partner failed to comply with Section 15904.08.
(b) A partner or transferee that received a distribution knowing
that the distribution to that partner or transferee was made in
violation of Section 15905.08 is personally liable to the limited
partnership but only to the extent that the distribution received by
the partner or transferee exceeded the amount that could have been
properly paid under Section 15905.08.
(c) A general partner against which an action is commenced under
subdivision (a) may:
(1) implead in the action any other person that is liable under
subdivision (a) and compel contribution from the person; and
(2) implead in the action any person that received a distribution
in violation of subdivision (b) and compel contribution from the
person in the amount the person received in violation of subdivision
(b).
(d) An action under this section is barred if it is not commenced
within four years after the distribution.
