Partner'sDissociation When

Business NotWound Up

 

§425-133  Purchase of dissociated partner'sinterest.  (a)  If a partner is dissociated from a partnership withoutresulting in a dissolution and winding up of the partnership business undersection 425-138, the partnership shall cause the dissociated partner's interestin the partnership to be purchased for a buyout price determined pursuant tosubsection (b).

(b)  The buyout price of a dissociatedpartner's interest is the amount that would have been distributable to thedissociating partner under section 425-144(b) if, on the date of dissociation,the assets of the partnership were sold at a price equal to the greater of theliquidation value or the value based on a sale of the entire business as a goingconcern without the dissociated partner and the partnership were wound up as ofthat date.  Interest shall be paid from the date of dissociation to the date ofpayment.

(c)  Damages for wrongful dissociation undersection 425-131(b), and all other amounts owing, whether or not presently due,from the dissociated partner to the partnership, shall be offset against thebuyout price.  Interest shall be paid from the date the amount owed becomes dueto the date of payment.

(d)  A partnership shall indemnify adissociated partner whose interest is being purchased against all partnershipliabilities, whether incurred before or after the dissociation, exceptliabilities incurred by an act of the dissociated partner under section425-134.

(e)  If no agreement for the purchase of adissociated partner's interest is reached within one hundred twenty days aftera written demand for payment, the partnership shall pay, or cause to be paid,in cash to the dissociated partner the amount the partnership estimates to be thebuyout price and accrued interest, reduced by any offsets and accrued interestunder subsection (c).

(f)  If a deferred payment is authorized undersubsection (h), the partnership may tender a written offer to pay the amount itestimates to be the buyout price and accrued interest, reduced by any offsetsunder subsection (c), stating the time of payment, the amount and type ofsecurity for payment, and the other terms and conditions of the obligation.

(g)  The payment or tender required bysubsection (e) or (f) shall be accompanied by the following:

(1)  A statement of partnership assets and liabilitiesas of the date of dissociation;

(2)  The latest available partnership balance sheetand income statement, if any;

(3)  An explanation of how the estimated amount of thepayment was calculated; and

(4)  Written notice that the payment is in fullsatisfaction of the obligation to purchase unless, within one hundred twentydays after the written notice, the dissociated partner commences an action todetermine the buyout price, any offsets under subsection (c), or other terms ofthe obligation to purchase.

(h)  A partner who wrongfully dissociatesbefore the expiration of a definite term or the completion of a particularundertaking is not entitled to payment of any portion of the buyout price untilthe expiration of the term or completion of the undertaking, unless the partnerestablishes to the satisfaction of the court that earlier payment will notcause undue hardship to the business of the partnership.  A deferred paymentmust be adequately secured and bear interest.

(i)  A dissociated partner may maintain anaction against the partnership, pursuant to section 425-124(b)(2), to determinethe buyout price of that partner's interest, any offsets under subsection (c),or other terms of the obligation to purchase.  The action must be commencedwithin one hundred twenty days after the partnership has tendered payment or anoffer to pay or within one year after written demand for payment if no paymentor offer to pay is tendered.  The court shall determine the buyout price of thedissociated partner's interest, any offset due under subsection (c), andaccrued interest, and enter judgment for any additional payment or refund.  Ifdeferred payment is authorized under subsection (h), the court shall alsodetermine the security for payment and other terms of the obligation topurchase.  The court may assess reasonable attorney's fees and the fees andexpenses of appraisers or other experts for a party to the action, in amountsthe court finds equitable, against a party that the court finds actedarbitrarily, vexatiously, or not in good faith.  The finding may be based onthe partnership's failure to tender payment or an offer to pay or to complywith subsection (g). [L 1999, c 284, pt of §1]