Central District Consumer Bankruptcy Attorney's Association

It simply says no partner can transfer their interest without the consent of the other partners.

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Yes, and it does violate the partnership agreement.

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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 Trustee's Motion is under 11 U.S.C. 363(f). The partnership agreement does not allow unapproved partners into the partnership, for whatever that's 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 he's put no money down, so I'm wondering if this is just pressure on the existing partners. The existing partners were asked to buy out the Debtor's interest for twice as much as the buyer offered. I'm wondering if this buyer is for real or just to try and get a bidding war going. I've never had a small minority interest sold before unless the other partners wanted to buy it. It seems strange to say "Hey, I'm 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, I'm 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
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