Central District Consumer Bankruptcy Attorney's Association

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An individual limited liability partner is not generally responsible
for the debts of the LLP. Out of caution you may list those LLP
creditors to provide them notice but I would note that those creditors
are 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)
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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
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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) 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="1r1rt7v1iwzo@webmail.mysuperpageshosting.com"
charsetF-8
p{margin: 0;padding: 0;}An individual limited liability
partner is not generally responsible for the debts of the LLP. Out of
caution you may list those LLP creditors to provide them notice but I would
note that those creditors are disputed as to his individual
liability.
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 15:06:20 -0800, Holly Roark
<hollyroark22@gmail.com> wrote:

The post was migrated from Yahoo.