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Trustee Selling 20% interest in partnership that owns
My standard disclaimer applies: I've been an attorney for less than two
years and my work is pretty much 100% Chapter 11 so please do your own
research to verify what I'm about to say.
I am fairly confident that the clause you quoted is unenforceable as an
unreasonable restraint on alienation. Once you check into that under
California law, then the next step is to determine what to do to save those
shares.
One suggestion is to comb through the operating agreement and related
documents. Look for clauses that can help you. There may also be case law
that characterizes this type of clause as something else like a right of
first refusal or right of first offer. What did they intend when they wrote
it? If so, the shareholders, in the worst case, will have to pay exactly
what the buyer is offering. Maybe the operating agreement can be amended
before the sale? I don't know what effects that will have, if any. If
you're going this route, I would seek experienced business law attorneys
that can lend some insight; this could potentially be expensive.
Side Note: So I am unfamiliar with Chapter 7, but assuming you make it so
that the Trustee cannot sell the share without offering it to the
shareholders on the same terms (I think this is a best case scenario).
Can't the trustee literally sit in the Debtor's shoes and collect $$
forever? Why does he have to sell it?
Sincerely,
Michael Avanesian
Law Offices of David A. Tilem
www.tilemlaw.com
818-507-6000
On Mon, Dec 16, 2013 at 6:44 PM, Steven B. Lever wrote:
>
>
> It simply says no partner can transfer their interest without the consent
> of the other partners.
>
>
>
> *From:* cdcbaa@yahoogroups.com [mailto:cdcbaa@yahoogroups.com] *On Behalf
> Of *Michael Avanesian
> *Sent:* Monday, December 16, 2013 6:39 PM
> *To:* cdcbaa@yahoogroups.com
> *Subject:* Re: [cdcbaa] Trustee Selling 20% interest in partnership that
> owns small Mexican bodega
>
>
>
>
>
> Is the partnership interest inalienable for some reason? I would look at
> the partnership agreement to control.
>
>
>
> The partnership agreement should have provisions for what happens when one
> partner wants to leave: if there is a divorce, death, fight etc. Usually
> those provisions are like rights of first refusal which enable the
> remaining partners to keep whoever they want out (provided they have the
> dough).
>
>
>
> Sincerely,
>
> Michael Avanesian
>
> Law Offices of David A. Tilem
>
> www.tilemlaw.com
>
> 818-507-6000
>
>
>
> On Mon, Dec 16, 2013 at 5:49 PM, Leventhal Law Group, P.C.
> wrote:
>
>
>
> Are the partners willing to object on the grounds it violates the
> partnership agreement?
>
>
>
>
>
> Jonathan Leventhal, Esq..
> Leventhal Law Group, P.C.
> 818-347-5800
>
> This email and any attachments thereto may contain private, confidential,
> and privileged material for the sole use of the intended recipient. Any
> review, copying, or distribution of this email (or any attachments thereto)
> by others is strictly prohibited. If you are not the intended recipient,
> please contact the sender immediately and permanently delete the original
> and any copies of this email and any attachments thereto.
>
> Leventhal Law Group, P.C. is a Debt Relief Agency under federal law.
>
> Note: The Leventhal Law Group, P.C. does not represent you until a
> written fee agreement has been signed by you and a representation ive of
> the Leventhal Law Group, P.C. and all fees listed in the agreement have
> been paid.
>
>
>
> -------- Original message --------
>
>
> Date:12/16/2013 5:42 PM (GMT-08:00)
>
> To: cdcbaa@yahoogroups.com
>
> Subject: [cdcbaa] Trustee Selling 20% interest in partnership that owns
> small Mexican bodega
>
>
>
>
>
> This is a new one on me. A Chapter 7 Trustee is selling a 20% interest in
> a general partnership owned by my clients that represents their ownership
> in a family grocery store with about 500-800 square feet of retail space.
> The Trustees Motion is under 11 U.S.C. 363(f). The partnership
> agreement does not allow unapproved partners into the partnership, for
> whatever thats worth. 11 U.S.C. 541(c) still makes that an asset of the
> estate despite the restriction on transfer, although the corporations code
> highly restricts what a transferred interest can get in terms of rights of
> the new partner. One of the nondebtor partners is the landlord, and there
> is no lease.
>
>
>
> The price the buyer is offering seems very high, and hes put no money
> down, so Im wondering if this is just pressure on the existing partners.
> The existing partners were asked to buy out the Debtors interest for twice
> as much as the buyer offered. Im wondering if this buyer is for real or
> just to try and get a bidding war going. Ive never had a small minority
> interest sold before unless the other partners wanted to buy it. It seems
> strange to say Hey, Im your new partner, start paying me. They could
> just hold onto the money, or start paying themselves a salary for the work
> they do instead of withdrawals.
>
>
>
> More than the strangeness of it all, however, Im wondering if anyone has
> any good ideas as to whether the partners can use to fight off this
> intrusion into their business without going into a bidding war.
>
>
>
> Thank you
>
>
>
> Steve
>
>
>
> Law Offices of Steven B. Lever
>
> >
>
> > Steven B. Lever
>
> >( Tel. (562) 436-5456 ext. 1
>
> >( Fax (562) 485-6886
>
> >* sblever@leverlaw.com
>
> > www.leverlaw.com
>
>
>
>
>
>
>
My standard disclaimer applies: I've been an attorney for less than two years and my work is pretty much 100% Chapter 11 so please do your own research to verify what I'm about to say.
I am fairly confident that the clause you quoted is unenforceable as an unreasonable restraint on alienation. Once you check into that under California law, then the next step is to determine what to do to save those shares.
One suggestion is to comb through the operating agreement and related documents. Look for clauses that can help you. There may also be case law that characterizes this type of clause as something else like a right of first refusal or right of first offer. What did they intend when they wrote it? If so, the shareholders, in the worst case, will have to pay exactly what the buyer is offering. Maybe the operating agreement can be amended before the sale? I don't know what effects that will have, if any. If you're going this route, I would seek experienced business law attorneys that can lend some insight; this could potentially be expensive.
Side Note: So I am unfamiliar with Chapter 7, but assuming you make it so that the Trustee cannot sell the share without offering it to the shareholders on the same terms (I think this is a best case scena
The post was migrated from Yahoo.
Is the partnership interest inalienable for some reason? I would look at
the partnership agreement to control.
The partnership agreement should have provisions for what happens when one
partner wants to leave: if there is a divorce, death, fight etc. Usually
those provisions are like rights of first refusal which enable the
remaining partners to keep whoever they want out (provided they have the
dough).
Sincerely,
Michael Avanesian
Law Offices of David A. Tilem
www.tilemlaw.com
818-507-6000
On Mon, Dec 16, 2013 at 5:49 PM, Leventhal Law Group, P.C. wrote:
>
>
> Are the partners willing to object on the grounds it violates the
> partnership agreement?
>
>
> Jonathan Leventhal, Esq..
> Leventhal Law Group, P.C.
> 818-347-5800
>
> This email and any attachments thereto may contain private, confidential,
> and privileged material for the sole use of the intended recipient. Any
> review, copying, or distribution of this email (or any attachments thereto)
> by others is strictly prohibited. If you are not the intended recipient,
> please contact the sender immediately and permanently delete the original
> and any copies of this email and any attachments thereto.
>
> Leventhal Law Group, P.C. is a Debt Relief Agency under federal law.
>
> Note: The Leventhal Law Group, P.C. does not represent you until a
> written fee agreement has been signed by you and a representation ive of
> the Leventhal Law Group, P.C. and all fees listed in the agreement have
> been paid.
>
>
> -------- Original message --------
> Date:12/16/2013 5:42 PM (GMT-08:00)
> To: cdcbaa@yahoogroups.com
> Subject: [cdcbaa] Trustee Selling 20% interest in partnership that owns
> small Mexican bodega
>
>
>
> This is a new one on me. A Chapter 7 Trustee is selling a 20% interest
> in a general partnership owned by my clients that represents their
> ownership in a family grocery store with about 500-800 square feet of
> retail space. The Trustees Motion is under 11 U.S.C. 363(f). The
> partnership agreement does not allow unapproved partners into the
> partnership, for whatever thats worth. 11 U.S.C. 541(c) still makes
> that an asset of the estate despite the restriction on transfer, although
> the corporations code highly restricts what a transferred interest can get
> in terms of rights of the new partner. One of the nondebtor partners is
> the landlord, and there is no lease.
>
>
>
> The price the buyer is offering seems very high, and hes put no money
> down, so Im wondering if this is just pressure on the existing partners.
> The existing partners were asked to buy out the Debtors interest for twice
> as much as the buyer offered. Im wondering if this buyer is for real or
> just to try and get a bidding war going. Ive never had a small minority
> interest sold before unless the other partners wanted to buy it. It seems
> strange to say Hey, Im your new partner, start paying me. They could
> just hold onto the money, or start paying themselves a salary for the work
> they do instead of withdrawals.
>
>
>
> More than the strangeness of it all, however, Im wondering if anyone has
> any good ideas as to whether the partners can use to fight off this
> intrusion into their business without going into a bidding war.
>
>
>
> Thank you
>
>
>
> Steve
>
>
>
> Law Offices of Steven B. Lever
>
> >
>
> > Steven B. Lever
>
> >( Tel. (562) 436-5456 ext. 1
>
> >( Fax (562) 485-6886
>
> >* sblever@leverlaw.com
>
> > www.leverlaw.com
>
>
>
>
>
Is the partnership interest inalienable for some reason? I would look at the partnership agreement to control.The partnership agreement should have provisions for what happens when one partner wants to leave: if there is a divorce, death, fight etc. Usually those provisions are like rights of first refusal which enable the remaining partners to keep whoever they want out (provided they have the dough).
Sincerely, Michael AvanesianLaw Offices of David A. Tilemwww.tilemlaw.com
818-507-6000
On Mon, Dec 16, 2013 at 5:49 PM, Leventhal Law Group, P.C. <law@3yl.com> wrote:
Are the partners willing to object on the grounds it violates the partnership agreement?
Jonathan Leventhal, Esq..
Leventhal Law Group, P.C.
818-347-5800
This email and any attachments thereto may contain private, confidential, and privileged material for the sole use of the intended recipient. Any review, copying, or distribution of this email (or any attachments thereto) by others is strictly prohibited. If
you are not the intended recipient, please contact the sender immediately and permanently delete the original and any copies of this email and any attachments thereto.
Leventhal Law Group, P.C. is a Debt Relief Agency under federal law.
Note: The Leventhal Law Group, P.C. does not represent you until a written fee agreement has been signed by you and a representation ive of the Leventhal Law Group, P.C. and all fees listed in the agreement have been paid.
-------- Original message --------
Date:12/16/2013 5:42 PM (GMT-08:00)
To: cdcbaa@yahoogroups.com
Subject: [cdcbaa] Trustee Selling 20% interest in partnership that owns small Mexican bodega
This is a new one on me. A Chapter 7 Trustee is selling a 20% interest in a general partnership owned by my clients that represents their ownership in a family grocery
store with about 500-800 square feet of retail space. The Trustees Motion is under 11 U.S.C. 363(f). The partnership agreement does not allow unapproved partners into the partnership, for whatever thats worth. 11 U.S.C. 541(c) still makes that an
asset of the estate despite the restriction on transfer, although the corporations code highly restricts what a transferred interest can get in terms of rights of the new partner. One of the nondebtor partners is the landlord, and there is no lease.
The price the buyer is offering seems very high, and hes put no money down, so Im wondering if this is just pressure on the existing partners. The existing partners
were asked to buy out the Debtors interest for twice as much as the buyer offered. Im wondering if this buyer is for real or just to try and get a bidding war going. Ive never had a small minority interest sold before unless the other partners wanted
to buy it. It seems strange to say Hey, Im your new partner, start paying me. They could just hold onto the money, or start paying themselves a salary for the work they do instead of withdrawals.
More than the strangeness of it all, however, Im wondering if anyone has any good ideas as to whether the partners can use to fight off this intrusion into their business
without going into a bidding war.
Thank you
Steve
Law Offices of Steven B. Lever
>
> Steven B. Lever
>(
Tel. (562) 436-5456 ext. 1
>(
Fax (562) 485-6886
>*
sblever@leverlaw.com
>
The post was migrated from Yahoo.