Code Section Group

Corporations Code - CORP

TITLE 2. PARTNERSHIPS [15800 - 16962]

  ( Title 2 added by Stats. 1949, Ch. 383. )

CHAPTER 5. Uniform Partnership Act of 1994 [16100 - 16962]

  ( Chapter 5 added by Stats. 1996, Ch. 1003, Sec. 2. )

ARTICLE 8. Winding Up Partnership Business [16801 - 16807]
  ( Article 8 added by Stats. 1996, Ch. 1003, Sec. 2. )

16801.
  

A partnership is dissolved, and its business shall be wound up, only upon the occurrence of any of the following events:

(1) In a partnership at will, by the express will to dissolve and wind up the partnership business of at least half of the partners, including partners, other than wrongfully dissociating partners, who have dissociated within the preceding 90 days, and for which purpose a dissociation under paragraph (1) of Section 16601 constitutes an expression of that partner’s will to dissolve and wind up the partnership business.

(2) In a partnership for a definite term or particular undertaking, when any of the following occurs:

(A) After the expiration of 90 days after a partner’s dissociation by death or otherwise under paragraphs (6) to (10), inclusive, of Section 16601, or a partner’s wrongful dissociation under subdivision (b) of Section 16602 unless before that time a majority in interest of the partners, including partners who have rightfully dissociated pursuant to subparagraph (A) of paragraph (2) of subdivision (b) of Section 16602, agree to continue the partnership.

(B) The express will of all of the partners to wind up the partnership business.

(C) The expiration of the term or the completion of the undertaking.

(3) An event agreed to in the partnership agreement resulting in the winding up of the partnership business.

(4) An event that makes it unlawful for all or substantially all of the business of the partnership to be continued, but a cure of illegality within 90 days after notice to the partnership of the event is effective retroactively to the date of the event for purposes of this section.

(5) On application by a partner, a judicial determination that any of the following apply:

(A) The economic purpose of the partnership is likely to be unreasonably frustrated.

(B) Another partner has engaged in conduct relating to the partnership business that makes it not reasonably practicable to carry on the business in partnership with that partner.

(C) It is not otherwise reasonably practicable to carry on the partnership business in conformity with the partnership agreement.

(6) On application by a transferee of a partner’s transferable interest, a judicial determination that it is equitable to wind up the partnership business after the expiration of the term or completion of the undertaking, if the partnership was for a definite term or particular undertaking at the time of the transfer or entry of the charging order that gave rise to the transfer.

(Added by Stats. 1996, Ch. 1003, Sec. 2. Effective January 1, 1997.)

16802.
  

(a) Subject to subdivision (b), a partnership continues after dissolution only for the purpose of winding up its business. The partnership is terminated when the winding up of its business is completed.

(b) At any time after the dissolution of a partnership and before the winding up of its business is completed, all of the partners, including any dissociating partner other than a wrongfully dissociating partner, may waive the right to have the partnership’s business wound up and the partnership terminated. In that event both of the following apply:

(1) The partnership resumes carrying on its business as if dissolution had never occurred, and any liability incurred by the partnership or a partner after the dissolution and before the waiver is determined as if dissolution had never occurred.

(2) The rights of a third party accruing under paragraph (1) of Section 16804 or arising out of conduct in reliance on the dissolution before the third party knew or received a notification of the waiver may not be adversely affected.

(Added by Stats. 1996, Ch. 1003, Sec. 2. Effective January 1, 1997.)

16803.
  

(a) After dissolution, a partner who has not dissociated may participate in winding up the partnership’s business, but on application of any partner, partner’s legal representative, or transferee, the court, for good cause shown, may order judicial supervision of the winding up.

(b) The legal representative of the last surviving partner may wind up a partnership’s business.

(c) A person winding up a partnership’s business may preserve the partnership business or property as a going concern for a reasonable time, prosecute and defend actions and proceedings, whether civil, criminal, or administrative, settle and close the partnership’s business, dispose of and transfer the partnership’s property, discharge the partnership’s liabilities, distribute the assets of the partnership pursuant to Section 16807, settle disputes by mediation or arbitration, and perform other necessary acts.

(Added by Stats. 1996, Ch. 1003, Sec. 2. Effective January 1, 1997.)

16804.
  

Subject to Section 16805, a partnership is bound by a partner’s act after dissolution that is either of the following:

(1) Appropriate for winding up the partnership business.

(2) Would have bound the partnership under Section 16301 before dissolution, if the other party to the transaction did not have notice of the dissolution.

(Added by Stats. 1996, Ch. 1003, Sec. 2. Effective January 1, 1997.)

16805.
  

(a) After dissolution, a partner who has not wrongfully dissociated may file a statement of dissolution stating the name of the partnership as filed with the Secretary of State, any identification number issued by the Secretary of State, and that the partnership has dissolved and is winding up its business.

(b) A statement of dissolution cancels a filed statement of partnership authority for the purposes of subdivision (d) of Section 16303 and is a limitation on authority for the purposes of subdivision (e) of Section 16303.

(c) For the purposes of Sections 16301 and 16804, a person not a partner is deemed to have notice of the dissolution and the limitation on the partners’ authority as a result of the statement of dissolution 90 days after it is filed.

(d) After filing and, if appropriate, recording a statement of dissolution, a dissolved partnership may file and, if appropriate, record a statement of partnership authority that will operate with respect to a person not a partner as provided in subdivisions (d) and (e) of Section 16303 in any transaction, whether or not the transaction is appropriate for winding up the partnership business.

(Added by Stats. 1996, Ch. 1003, Sec. 2. Effective January 1, 1997.)

16806.
  

(a) Except as otherwise provided in subdivision (b) and except for registered limited liability partnerships and foreign limited liability partnerships, after dissolution a partner is liable to the other partners for the partner’s share of any partnership liability incurred under Section 16804.

(b) Except for registered limited liability partnerships and foreign limited liability partnerships, a partner who, with knowledge of the dissolution, incurs a partnership liability under paragraph (2) of Section 16804 by an act that is not appropriate for winding up the partnership business is liable to the partnership for any damage caused to the partnership arising from the liability.

(Added by Stats. 1996, Ch. 1003, Sec. 2. Effective January 1, 1997.)

16807.
  

(a) In winding up a partnership’s business, the assets of the partnership, including the contributions of the partners required by this section, shall be applied to discharge its obligations to creditors, including, to the extent permitted by law, partners who are creditors. Any surplus shall be applied to pay in cash the net amount distributable to partners in accordance with their right to distributions under subdivision (b).

(b) Each partner is entitled to a settlement of all partnership accounts upon winding up the partnership business. In settling accounts among the partners, the profits and losses that result from the liquidation of the partnership assets shall be credited and charged to the partners’ accounts. The partnership shall make a distribution to a partner in an amount equal to any excess of the credits over the charges in the partner’s account. Except for registered limited liability partnerships and foreign limited liability partnerships, a partner shall contribute to the partnership an amount equal to any excess of the charges over the credits in the partner’s account.

(c) If a partner fails to contribute the full amount that the partner is obligated to contribute under subdivision (b), all of the other partners shall contribute, in the proportions in which those partners share partnership losses, the additional amount necessary to satisfy the partnership obligations for which they are liable under Section 16306. A partner or partner’s legal representative may recover from the other partners any contributions the partner makes to the extent the amount contributed exceeds that partner’s share of the partnership obligations for which the partner is personally liable under Section 16306.

(d) After the settlement of accounts, each partner shall contribute, in the proportion in which the partner shares partnership losses, the amount necessary to satisfy partnership obligations that were not known at the time of the settlement and for which the partner is personally liable under Section 16306.

(e) The estate of a deceased partner is liable for the partner’s obligation to contribute to the partnership.

(f) An assignee for the benefit of creditors of a partnership or a partner, or a person appointed by a court to represent creditors of a partnership or a partner, may enforce a partner’s obligation to contribute to the partnership.

(Added by Stats. 1996, Ch. 1003, Sec. 2. Effective January 1, 1997.)

CORPCorporations Code - CORP8.