Central District Consumer Bankruptcy Attorney's Association

Mark is correct. Disputed is more accurate then contingent.
d
________________________________
To: cdcbaa@yahoogroups.com
Sent: Thursday, December 8, 2011 3:12 PM
Subject: Re: [cdcbaa] Partner dissociated for filing bankruptcy? Help, please.
An individual limited liability
partner is not generally responsible for the debts of the LLP. Out of
caution you may list those LLP creditorsto provide them notice but I would
note thatthose creditorsare disputed as to his individual
liability.
Mark T. Jessee
Law Offices of Mark T. Jessee
"A Debt Relief
Agency"
50 W. Hillcrest Drive, Suite 200
Thousand Oaks, CA 91360
(805)
497-5868 (805) 497-5864 (Facsimile)
NOTICE TO RECIPIENT: THIS E-MAIL IS
MEANT FOR ONLY THE INTENDED RECIPIENT OF THE TRANSMISSION, AND THIS
COMMUNICATION IS INTENDED TO BE PRIVILEGED BY LAW. IF YOU RECEIVED THIS E-MAIL
IN ERROR, ANY REVIEW, USE, DISSEMINATION, DISTRIBUTION, OR COPYING OF THIS
E-MAIL IS STRICTLY PROHIBITED. PLEASE NOTIFY US IMMEDIATELY OF THE ERROR BY
RETURN E-MAIL AND PLEASE DELETE THIS MESSAGE FROM YOUR SYSTEM. THANK YOU IN
ADVANCE FOR YOUR COOPERATION.
On Thu, 8 Dec 2011 15:06:20 -0800, Holly Roark
wrote:
>I am definitely dealing with an LLP, a limited liability partnership.
(The statute says that a limited liability partner is not dissociated for filing
bk, but a general partner is. Fine. My guy is a limited
partner. In any case, I have found case law to get around that
issue.) All I am trying to figure out now is whether I need to list any
creditors of the LLP in the limited liability partner's personal bk.
>
>
>On Thu, Dec 8, 2011 at 2:54 PM, wrote:
>
>
>>
>>There are "Limited Partnerships" and then there are "Limited Liability
Partnerships". They are VERY different and your question seems to comingle
those entities. Which are you dealing with?
>>Best Regards,
>>Sharon C.
Hughes
>>Hughes
& Dunstan, LLP
>>21650
Oxnard Street, Suite 1960
>>Woodland Hills, CA 91367
>>Telephone: 818-715-9558x1
>>Facsimile: 818-715-9559
>>www.hughesanddunstan.com
>>A/V
Rated by the Martindale-Hubbell Law Directory
>>
>>This electronic mail message and any attached files are confidential,
contain information intended for the exclusive use of the individual or entity
to whom it is addressed, and may be legally privileged. If you are not the
intended recipient, please immediately reply to Sharon C. Hughes, at schug98@aol.com, or by telephone
at 818-715-9558x1,
indicating that you received this message and then delete the message without
delay. Thank you for your cooperation.
>>
>>Disclosure Under U.S. IRS
Circular 230: The recipient may not use any tax advice contained in this
communication, including any attachments, for the purpose of avoiding federal
tax related penalties or promoting, marketing or recommending to another party
any particular transaction or matter.
>>
>>In a message dated 12/8/2011 2:47:12 P.M. Pacific Standard Time, hollyroark22@gmail.com writes:
>>
>>>Question now on this matter is, do I have to amend debtor's schedules to
list the creditors of the partnership? California Limited Liability
Partnerships are confusing.(See Title 2, article 10 of the statute
here: http://www.leginfo.ca.gov/cgi-bin/calaw ... ectioncorp)ts
of the partnership, but I have also read that limited partners are "only liable
up to the amount of their investments". If my guy invested $20K in the
partnership and is theoreitcally liable up to that amount, and the partnership
is in debt $100K, do I list the partnership as a creditor in his personal BK
case, or do I list each individual creditor of the LLP, or
neither?
>>>
>>>Here's the statute:
>>>
>>>California CORPORATIONS CODE
>>>15903.03. (a) A
limited partner is not liable for any obligation of
>>>a limited partnership
unless named as a general partner in the
>>>certificate or, in addition to
exercising the rights and powers of a
>>>limited partner, the limited partner
participates in the control of
>>>the business. If a limited partner
participates in the control of the
>>>business without being named as a general
partner, that partner may
>>>be held liable as a general partner only to persons
who transact
>>>business with the limited partnership with actual knowledge of
that
>>>partner's participation in control and with a reasonable
belief,
>>>based upon the limited partner's conduct, that the partner is
a
>>>general partner at the time of the transaction. Nothing in this
>>>chapter
shall be construed to affect the liability of a limited
>>>partner to third
parties for the limited partner's participation in
>>>tortious
conduct.
>>>
>>>Let's say the debtor is nota general partner, but
"participates in the control of the business" and therefore under the statute
above, is liable for the obligations of the partnership (up to the amount of his
investment). Again, my question is, do I list the creditors of the
partnership in his BK, or do I list the partnership as a creditor?
According to the above statute, it appears thatI would have to find out
whether he held himself out to any particular creditors as a general partner,
and then only list those creditors. Any thoughts on who/how to list any
potential personal liability in this matter?
>>>
>>>I have to amend very soon if at all since the case is ready for discharge
now.
>>>
>>>Holly Roark
>>>
>>>
>>>On Mon, Nov 28, 2011 at 3:46 PM, Holly Roark wrote:
>>>
>>>Summit Investment Development v.
Curran, 69 F.3d 608 (1st Cir. 1995) holds that section 365(e) trumps the ipso facto termination provisions of a partnership agreement AND a state
partnership statute. See also In re Rittenhouse Carpet, Inc., 56
B.R. 131 (E.D. PA. 1985) (holding that section 365(e) prohibits the operation of
state laws providing that the mere filing of a petition under the Code causes
the immediate removal of a debtor/partner from a partnership.) See also In re Safren, 65 B.R. 566 (C.D. CA 1986) (holding that the
filing of a bankruptcy petition [Chapter 11] does not dissolve a general
partnership, notwithstanding the provision of California state law [UPA] being
to the contrary.) I have not found 9th Cir. authority in support or
contrary to the foregoing opinions, though Fotouhi v. Mansdorf, 427 B.R.
800 (N.D. CA 2010) assumes, without any analysis, that the debtor became
dissociated from the partnership upon the filing of the bankruptcy petition "as
a matter of law". In shepardizing Summit, I did find In re
Catapult, 165 F.3d 747 (9th Cir. 1999) which states that an executory
contract (assuming a partnership agreement is an executory contract) may not be
assumed without consent of the partners when a partner files for bankruptcy, but
that is a different issue from whether a partner "must" be dissociated due to
the California statute referenced below. This case gives the partners the
option of keeping the debtor as a partner. With respect to "assuming" such
an executory contract, there is also case authority which states that such a
contract "rides through" the bankruptcy and need not be assumed nor rejected, at
least in a Chapter 11 case. See In re JZ, L.L.C., 371 B.R. 412
(9th Cir. BAP 2007).
>>>>
>>>>My research is ongoing, and I will update
you.....
>>>>
>>>>Holly
>>>>
>>>>
>>>>
>>>>
>>>>>>Debtor was just informed by his partners that he was required to be
dissociated from their Limited Liability Partnershippartnership since he
filed a personal BK. He intends to pay hisbusiness debtand
wants to stay in the partnership, but partners insist that by law he must be
dissociated. The below is the code they cite to. Debtor is not
happy. Can someone offer me some perspective on the below code? Does
anyone have case law interpreting the below?Is there anything the debtor
can do to stay in the partnership?
>>>>>>
>>>>>>
>>>>>>CORPORATIONS CODE
>>>>>>SECTION 16601-16603
>>>>>>
>>>>>>16601. A partner is dissociated from a partnership upon the occurrence
of any of the following events: (1) The partnership's having notice of
the partner's express will to withdraw as a partner or on a later date specified
by the partner. (2) An event agreed to in the partnership agreement as causing
the partner's dissociation. (3) The partner's expulsion pursuant to the
partnership agreement. (4) The partner's expulsion by the unanimous vote of the
other partners if any of the following apply: (A) It is unlawful to carry on the
partnership business with that partner. (B) There has been a transfer of all or
substantially all of that partner's transferable interest in the partnership,
other than a transfer for security purposes, or a court order charging the
partner' s interest, that has not been foreclosed. (C) Within 90 days after the
partnership notifies a corporate partner that it will be expelled because it has
filed a certificate of dissolution or the equivalent, its charter has been
revoked, or its right to conduct business has been suspended by the jurisdiction
of its incorporation, there is no revocation of the certificate of dissolution
or no reinstatement of its charter or its right to conduct business. (D) A
partnership, limited partnership, or limited liability company that is a partner
has been dissolved and its business is being wound up. (5) On application by the
partnership or another partner, the partner's expulsion by judicial
determination because of any of the following: (A) The partner engaged in
wrongful conduct that adversely and materially affected the partnership
business. (B) The partner willfully or persistently committed a material breach
of the partnership agreement or of a duty owed to the partnership or the other
partners under Section 16404. (C) The partner engaged in conduct relating to the
partnership business that makes it not reasonably practicable to carry on the
business in partnership with the partner. (6) The partner's act
or failure to act in any of the following instances: (A) By becoming a debtor in
bankruptcy.
>>>>>>--
>>>>>>
>>>>>>Holly Roark
>>>>>>holly@roarklawoffices.com
>>>>>>www.roarklawoffices.com
>>>>>>Central District of California
>>>>>>Consumer Bankruptcy Attorney
>>>>>>1875 Century Park East, Suite 600
>>>>>>Los Angeles, CA 90067
>>>>>>T (310) 553-2600
>>>>>>F (310) 553-2601
>>>>>>
>>>>>>
>>>>>>
>>>
>>>
>>
>
>
>--
>
>Holly Roark
>holly@roarklawoffices.com
>www.roarklawoffices.com
>Central District of California
>Consumer Bankruptcy Attorney
>1875 Century Park East, Suite 600
>Los Angeles, CA 90067
>T (310) 553-2600
>F (310) 553-2601
>
>

The post was migrated from Yahoo.

charsetF-8;
format="flowed"
The investment in the LLP is an asset similar in concept to owning
stock in a corpation. It either has value or it does not based upon
the balance sheet and goodwill value of the LLP. The individual
limited liability partner's personal bankruptcy has no impact on the
value of the investment. The whole point of the LLP is to limit the
potential loss of the limited liability parter to the amount already
invested. If the LLP becomes insolvent the limited liability partner
generally has no responsibility for the debts and just never receives
back any money. It's like buying a stock for $10 per share and the
company becomes insovlent and goes out of business. The stock is
worthless. In that circumstance the creditors cannot generally go
after the shareholders.
Mark T. Jessee
Law Offices of Mark T. Jessee
"A Debt Relief Agency"
50 W. Hillcrest Drive, Suite 200
Thousand Oaks, CA 91360
(805) 497-5868 (805) 497-5864 (Facsimile)
NOTICE TO RECIPIENT: THIS E-MAIL IS MEANT FOR ONLY THE INTENDED
RECIPIENT OF THE TRANSMISSION, AND THIS COMMUNICATION IS INTENDED TO BE
PRIVILEGED BY LAW. IF YOU RECEIVED THIS E-MAIL IN ERROR, ANY REVIEW,
USE, DISSEMINATION, DISTRIBUTION, OR COPYING OF THIS E-MAIL IS STRICTLY
PROHIBITED. PLEASE NOTIFY US IMMEDIATELY OF THE ERROR BY RETURN E-MAIL
AND PLEASE DELETE THIS MESSAGE FROM YOUR SYSTEM. THANK YOU IN ADVANCE
FOR YOUR COOPERATION.
On Thu, 8 Dec 2011 15:10:20 -0800, Holly Roark wrote:
That raises other questions, then. If he discharges any
personal liability through the bk, does that mean he still gets his
investment back? Would it be a violation of the discharge injunction
to "collect" on that debt by not giving him back his investment? Or is
it more like a setoff right?
On Thu, Dec 8, 2011 at 2:59 PM, Dennis McGoldrick wrote:
Holly:
List the creditors as contingent, without a dollar amount, if you
decide to list them.
It is my practice to list them.
You can rely on Beezley and Neilson, but that is a pain, as if the
partnership creditors sue, you have to raise a Beezley or Neilson
defense and the debtor will be screaming you should have listed the
creditors.
The limitation in the statute for liability up to the investment
means the debtor loses his investment, not that there is additional
liability.
d
To: cdcbaa@yahoogroups.com; Strictly Bankruptcy Issues
Sent: Thursday, December 8, 2011 2:47 PM
Subject: Re: [cdcbaa] Partner dissociated for filing bankruptcy? Help, please.
Question now on this matter is, do I have to amend debtor's
schedules to list the creditors of the partnership? California Limited
Liability Partnerships are confusing. (See Title 2, article 10 of the
statute here:
http://www.leginfo.ca.gov/cgi-bin/calaw ... ectioncorp) I have
read that a limited liability partner is "not liable" for the debts of
the partnership, but I have also read that limited partners are "only
liable up to the amount of their investments". If my guy invested $20K
in the partnership and is theoreitcally liable up to that amount, and
the partnership is in debt $100K, do I list the partnership as a
creditor in his personal BK case, or do I list each individual creditor
of the LLP, or neither?
Here's the statute:
California CORPORATIONS CODE
15903.03. (a) A limited partner is not liable for any obligation of
a limited partnership unless named as a general partner in the
certificate or, in addition to exercising the rights and powers of a
limited partner, the limited partner participates in the control of
the business. If a limited partner participates in the control of the
business without being named as a general partner, that partner may
be held liable as a general partner only to persons who transact
business with the limited partnership with actual knowledge of that
partner's participation in control and with a reasonable belief,
based upon the limited partner's conduct, that the partner is a
general partner at the time of the transaction. Nothing in this
chapter shall be construed to affect the liability of a limited
partner to third parties for the limited partner's participation in
tortious conduct.
Let's say the debtor is not a general partner, but "participates in the
control of the business" and therefore under the statute above, is
liable for the obligations of the partnership (up to the amount of his
investment). Again, my question is, do I list the creditors of the
partnership in his BK, or do I list the partnership as a creditor?
According to the above statute, it appears that I would have to find
out whether he held himself out to any particular creditors as a
general partner, and then only list those creditors. Any thoughts on
who/how to list any potential personal liability in this matter?
I have to amend very soon if at all since the case is ready for
discharge now.
Holly Roark
On Mon, Nov 28, 2011 at 3:46 PM, Holly Roark wrote:
Summit Investment Development v. Curran, 69 F.3d 608 (1st Cir.
1995) holds that section 365(e) trumps the ipso facto termination
provisions of a partnership agreement AND a state partnership statute.
See also In re Rittenhouse Carpet, Inc., 56 B.R. 131 (E.D. PA. 1985)
(holding that section 365(e) prohibits the operation of state laws
providing that the mere filing of a petition under the Code causes the
immediate removal of a debtor/partner from a partnership.) See also
In re Safren, 65 B.R. 566 (C.D. CA 1986) (holding that the filing of a
bankruptcy petition [Chapter 11] does not dissolve a general
partnership, notwithstanding the provision of California state law
[UPA] being to the contrary.) I have not found 9th Cir. authority in
support or contrary to the foregoing opinions, though Fotouhi v.
Mansdorf, 427 B.R. 800 (N.D. CA 2010) assumes, without any analysis,
that the debtor became dissociated from the partnership upon the filing
of the bankruptcy petition "as a matter of law". In shepardizing
Summit, I did find In re Catapult, 165 F.3d 747 (9th Cir. 1999) which
states that an executory contract (assuming a partnership agreement is
an executory contract) may not be assumed without consent of the
partners when a partner files for bankruptcy, but that is a different
issue from whether a partner "must" be dissociated due to the
California statute referenced below. This case gives the partners the
option of keeping the debtor as a partner. With respect to "assuming"
such an executory contract, there is also case authority which states
that such a contract "rides through" the bankruptcy and need not be
assumed nor rejected, at least in a Chapter 11 case. See In re JZ,
L.L.C., 371 B.R. 412 (9th Cir. BAP 2007).
My research is ongoing, and I will update you.....
Holly
Debtor was just informed by his partners that he was required
to be dissociated from their Limited Liability Partnership partnership
since he filed a personal BK. He intends to pay his business debt and
wants to stay in the partnership, but partners insist that by law he
must be dissociated. The below is the code they cite to. Debtor is
not happy. Can someone offer me some perspective on the below code?
Does anyone have case law interpreting the below? Is there anything the
debtor can do to stay in the partnership?
CORPORATIONS CODE
SECTION 16601-16603
16601. A partner is dissociated from a partnership upon the
occurrence of any of the following events: (1) The partnership's having
notice of the partner's express will to withdraw as a partner or on a
later date specified by the partner. (2) An event agreed to in the
partnership agreement as causing the partner's dissociation. (3) The
partner's expulsion pursuant to the partnership agreement. (4) The
partner's expulsion by the unanimous vote of the other partners if any
of the following apply: (A) It is unlawful to carry on the partnership
business with that partner. (B) There has been a transfer of all or
substantially all of that partner's transferable interest in the
partnership, other than a transfer for security purposes, or a court
order charging the partner' s interest, that has not been foreclosed.
(C) Within 90 days after the partnership notifies a corporate partner
that it will be expelled because it has filed a certificate of
dissolution or the equivalent, its charter has been revoked, or its
right to conduct business has been suspended by the jurisdiction of its
incorporation, there is no revocation of the certificate of dissolution
or no reinstatement of its charter or its right to conduct business.
(D) A partnership, limited partnership, or limited liability company
that is a partner has been dissolved and its business is being wound
up. (5) On application by the partnership or another partner, the
partner's expulsion by judicial determination because of any of the
following: (A) The partner engaged in wrongful conduct that adversely
and materially affected the partnership business. (B) The partner
willfully or persistently committed a material breach of the
partnership agreement or of a duty owed to the partnership or the other
partners under Section 16404. (C) The partner engaged in conduct
relating to the partnership business that makes it not reasonably
practicable to carry on the business in partnership with the partner.
(6) The partner's act or failure to act in any of the following
instances: (A) By becoming a debtor in bankruptcy.
Holly Roark
holly@roarklawoffices.com
www.roarklawoffices.com
Central District of California
Consumer Bankruptcy Attorney
1875 Century Park East, Suite 600
Los Angeles, CA 90067
T (310) 553-2600
F (310) 553-2601
Holly Roark
holly@roarklawoffices.com
www.roarklawoffices.com
Central District of California
Consumer Bankruptcy Attorney
1875 Century Park East, Suite 600
Los Angeles, CA 90067
T (310) 553-2600
F (310) 553-2601
start="7jb4ko9jp3wg@webmail.mysuperpageshosting.com"
charsetF-8
p{margin: 0;padding: 0;}The investment in the LLP is an asset
similar in concept to owning stock in a corpation. It either has value or
it does not based upon the balance sheet and goodwill value of the LLP.
The individual limited liability partner's personal bankruptcy has no impact on
the value of the investment. The whole point of the LLP is to limit
the potential loss of the limited liability parter to the amount already
invested. If the LLP becomes insolvent the limited liability partner
generally has no responsibility for the debts and just never receives back any
money. It's like buying a stock for $10 per share and the company becomes
insovlent and goes out of business. The stock is worthless. In
that circumstance the creditors cannot generally go after the
shareholders.
Mark T. JesseeLaw Offices of Mark T. Jessee"A Debt Relief
Agency"50 W. Hillcrest Drive, Suite 200Thousand Oaks, CA 91360(805)
497-5868 (805) 497-5864 (Facsimile)NOTICE TO RECIPIENT: THIS E-MAIL IS
MEANT FOR ONLY THE INTENDED RECIPIENT OF THE TRANSMISSION, AND THIS
COMMUNICATION IS INTENDED TO BE PRIVILEGED BY LAW. IF YOU RECEIVED THIS E-MAIL
IN ERROR, ANY REVIEW, USE, DISSEMINATION, DISTRIBUTION, OR COPYING OF THIS
E-MAIL IS STRICTLY PROHIBITED. PLEASE NOTIFY US IMMEDIATELY OF THE ERROR BY
RETURN E-MAIL AND PLEASE DELETE THIS MESSAGE FROM YOUR SYSTEM. THANK YOU IN
ADVANCE FOR YOUR COOPERATION.
On Thu, 8 Dec 2011 15:10:20 -0800, Holly Roark
<hollyroark22@gmail.com> wrote:

The post was migrated from Yahoo.

Holly:
List the creditors as contingent, without a dollar amount, if you decide to list them.
It is my practice to list them.
You can rely on Beezley and Neilson, but that is a pain, as if the partnership creditors sue, you have to raise a Beezley or Neilson defense and the debtor will be screaming you should have listed the creditors.
The limitation in the statute for liability up to the investment means the debtor loses his investment, not that there is additional liability.
d
________________________________
To: cdcbaa@yahoogroups.com; Strictly Bankruptcy Issues Sent: Thursday, December 8, 2011 2:47 PM
Subject: Re: [cdcbaa] Partner dissociated for filing bankruptcy? Help, please.
Question now on this matter is, do I have to amend debtor's schedules to list the creditors of the partnership? California Limited Liability Partnerships are confusing.(See Title 2, article 10 of the statute here: http://www.leginfo.ca.gov/cgi-bin/calaw ... ectioncorp) I have read that a limited liability partner is "not liable" for the debts of the partnership, but I have also read that limited partners are "only liable up to the amount of their investments". If my guy invested $20K in the partnership and is theoreitcally liable up to that amount, and the partnership is in debt $100K, do I list the partnership as a creditor in his personal BK case, or do I list each individual creditor of the LLP, or neither?
Here's the statute:
California CORPORATIONS CODE
15903.03. (a) A limited partner is not liable for any obligation of
a limited partnership unless named as a general partner in the
certificate or, in addition to exercising the rights and powers of a
limited partner, the limited partner participates in the control of
the business. If a limited partner participates in the control of the
business without being named as a general partner, that partner may
be held liable as a general partner only to persons who transact
business with the limited partnership with actual knowledge of that
partner's participation in control and with a reasonable belief,
based upon the limited partner's conduct, that the partner is a
general partner at the time of the transaction. Nothing in this
chapter shall be construed to affect the liability of a limited
partner to third parties for the limited partner's participation in
tortious conduct.
Let's say the debtor is nota general partner, but "participates in the control of the business" and therefore under the statute above, is liable for the obligations of the partnership (up to the amount of his investment). Again, my question is, do I list the creditors of the partnership in his BK, or do I list the partnership as a creditor? According to the above statute, it appears thatI would have to find out whether he held himself out to any particular creditors as a general partner, and then only list those creditors. Any thoughts on who/how to list any potential personal liability in this matter?
I have to amend very soon if at all since the case is ready for discharge now.
Holly Roark
On Mon, Nov 28, 2011 at 3:46 PM, Holly Roark wrote:
Summit Investment Development v. Curran, 69 F.3d 608 (1st Cir. 1995) holds that section 365(e) trumps the ipso facto termination provisions of a partnership agreement AND a state partnership statute. See also In re Rittenhouse Carpet, Inc., 56 B.R. 131 (E.D. PA. 1985) (holding that section 365(e) prohibits the operation of state laws providing that the mere filing of a petition under the Code causes the immediate removal of a debtor/partner from a partnership.) See also In re Safren, 65 B.R. 566 (C.D. CA 1986) (holding that the filing of a bankruptcy petition [Chapter 11] does not dissolve a general partnership, notwithstanding the provision of California state law [UPA] being to the contrary.) I have not found 9th Cir. authority in support or contrary to the foregoing opinions, though Fotouhi v. Mansdorf, 427 B.R. 800 (N.D. CA 2010) assumes, without any analysis, that the debtor became dissociated from the partnership upon the filing of the
bankruptcy petition "as a matter of law". In shepardizing Summit, I did find In re Catapult, 165 F.3d 747 (9th Cir. 1999) which states that an executory contract (assuming a partnership agreement is an executory contract) may not be assumed without consent of the partners when a partner files for bankruptcy, but that is a different issue from whether a partner "must" be dissociated due to the California statute referenced below. This case gives the partners the option of keeping the debtor as a partner.se authority which states that such a contract "rides through" the bankruptcy and need not be assumed nor rejected, at least in a Chapter 11 case.>
>My research is ongoing, and I will update you.....
>
>Holly
>
>
>
>Debtor was just informed by his partners that he was required to be dissociated from their Limited Liability Partnershippartnership since he filed a personal BK. He intends to pay hisbusiness debtand wants to stay in the partnership, but partners insist that by law he must be dissociated. The below is the code they cite to. Debtor is not happy. Can someone offer me some perspective on the below code?g the debtor can do to stay in the partnership?
>>>
>>>
>>>CORPORATIONS CODE
>>>SECTION 16601-16603
>>>
>>>16601. A partner is dissociated from a partnership upon the occurrence of any of the following events: (1) The partnership's having notice of the partner's express will to withdraw as a partner or on a later date specified by the partner. (2) An event agreed to in the partnership agreement as causing the partner's dissociation. (3) The partner's expulsion pursuant to the partnership agreement. (4) The partner's expulsion by the unanimous vote of the other partners if any of the following apply: (A) It is unlawful to carry on the partnership business with that partner. (B) There has been a transfer of all or substantially all of that partner's transferable interest in the partnership, other than a transfer for security purposes, or a court order charging the partner' s interest, that has not been foreclosed. (C) Within 90 days after the partnership notifies a corporate partner that it will be expelled because it has filed a certificate of dissolution
or the equivalent, its charter has been revoked, or its right to conduct business has been suspended by the jurisdiction of its incorporation, there is no revocation of the certificate of dissolution or no reinstatement of its charter or its right to conduct business. (D) A partnership, limited partnership, or limited liability company that is a partner has been dissolved and its business is being wound up. (5) On application by the partnership or another partner, the partner's expulsion by judicial determination because of any of the following: (A) The partner engaged in wrongful conduct that adversely and materially affected the partnership business. (B) The partner willfully or persistently committed a material breach of the partnership agreement or of a duty owed to the partnership or the other partners under Section 16404. (C) The partner engaged in conduct relating to the partnership business that makes it not reasonably practicable to carry on
the business in partnership with the partner. (6) The partner's act or failure to act in any of the following instances: (A) By becoming a debtor in bankruptcy.
>>>--
>>>
>>>Holly Roark
>>>holly@roarklawoffices.com
>>>www.roarklawoffices.com
>>>Central District of California
>>>Consumer Bankruptcy Attorney
>>>1875 Century Park East, Suite 600
>>>Los Angeles, CA 90067
>>>T (310) 553-2600
>>>F (310) 553-2601
>>>
>>>

The post was migrated from Yahoo.

Holly:
good work, but you had better take that argument to the bk judge, a state court judge will follow the state statute.
d
________________________________
To: cdcbaa@yahoogroups.com
Sent: Monday, November 28, 2011 3:46 PM
Subject: Re: [cdcbaa] Partner dissociated for filing bankruptcy? Help, please.
Summit Investment Development v. Curran, 69 F.3d 608 (1st Cir. 1995) holds that section 365(e) trumps the ipso facto termination provisions of a partnership agreement AND a state partnership statute. See also In re Rittenhouse Carpet, Inc., 56 B.R. 131 (E.D. PA. 1985) (holding that section 365(e) prohibits the operation of state laws providing that the mere filing of a petition under the Code causes the immediate removal of a debtor/partner from a partnership.) See also In re Safren, 65 B.R. 566 (C.D. CA 1986) (holding that the filing of a bankruptcy petition [Chapter 11] does not dissolve a general partnership, notwithstanding the provision of California state law [UPA] being to the contrary.) I have not found 9th Cir. authority in support or contrary to the foregoing opinions, though Fotouhi v. Mansdorf, 427 B.R. 800 (N.D. CA 2010) assumes, without any analysis, that the debtor became dissociated from the partnership upon the filing of the
bankruptcy petition "as a matter of law". In shepardizing Summit, I did find In re Catapult, 165 F.3d 747 (9th Cir. 1999) which states that an executory contract (assuming a partnership agreement is an executory contract) may not be assumed without consent of the partners when a partner files for bankruptcy, but that is a different issue from whether a partner "must" be dissociated due to the California statute referenced below. This case gives the partners the option of keeping the debtor as a partner.se authority which states that such a contract "rides through" the bankruptcy and need not be assumed nor rejected, at least in a Chapter 11 case.
My research is ongoing, and I will update you.....
Holly
On Sat, Nov 26, 2011 at 7:05 PM, Dennis wrote:
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>Holly, your debtor is out.
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>Sent from my iPhone
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>On Nov 22, 2011, at 4:08 PM, Holly Roark wrote:
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>>Debtor was just informed by his partners that he was required to be dissociated from their Limited Liability Partnershippartnership since he filed a personal BK. He intends to pay hisbusiness debtand wants to stay in the partnership, but partners insist that by law he must be dissociated. The below is the code they cite to. Debtor is not happy. Can someone offer me some perspective on the below code?g the debtor can do to stay in the partnership?
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>>CORPORATIONS CODE
>>SECTION 16601-16603
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>>16601. A partner is dissociated from a partnership upon the
occurrence of any of the following events: (1) The partnership's having notice of the partner's express will
to withdraw as a partner or on a later date specified by the partner. (2) An event agreed to in the partnership agreement as causing the
partner's dissociation. (3) The partner's expulsion pursuant to the partnership agreement. (4) The partner's expulsion by the unanimous vote of the other
partners if any of the following apply: (A) It is unlawful to carry on the partnership business with that
partner. (B) There has been a transfer of all or substantially all of that
partner's transferable interest in the partnership, other than a
transfer for security purposes, or a court order charging the partner'
s interest, that has not been foreclosed. (C) Within 90 days after the partnership notifies a corporate
partner that it will be expelled because it has filed a certificate
of dissolution or the equivalent, its charter has been revoked, or
its right to conduct business has been suspended by the jurisdiction
of its incorporation, there is no revocation of the certificate of
dissolution or no reinstatement of its charter or its right to
conduct business. (D) A partnership, limited partnership, or limited liability
company that is a partner has been dissolved and its business is
being wound up. (5) On application by the partnership or another partner, the
partner's expulsion by judicial determination because of any of the
following: (A) The partner engaged in wrongful conduct that adversely and
materially affected the partnership business. (B) The partner willfully or persistently committed a material
breach of the partnership agreement or of a duty owed to the
partnership or the other partners under Section 16404. (C) The partner engaged in conduct relating to the partnership
business that makes it not reasonably practicable to carry on the
business in partnership with the partner. (6) The partner's act or failure to act in any of the following
instances: (A) By becoming a debtor in bankruptcy.
>>--
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>>Holly Roark
>>holly@roarklawoffices.com
>>www.roarklawoffices.com
>>Central District of California
>>Consumer Bankruptcy Attorney
>>1875 Century Park East, Suite 600
>>Los Angeles, CA 90067
>>T (310) 553-2600
>>F (310) 553-2601
>>
>>
Holly Roark
holly@roarklawoffices.com
www.roarklawoffices.com
Central District of California
Consumer Bankruptcy Attorney
1875 Century Park East, Suite 600
Los Angeles, CA 90067
T (310) 553-2600
F (310) 553-2601

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