Will bankruptcy of a limited partner mandate the dissolution of the partnership?
Question Details:
My mother and her brother are 50/50 partners in a corporation that owns rental housing units. My uncle is the General Partner and my mother is limited. If the limited partner were to file bankruptcy will that mandate the dissolution and liquidation of the partnership? My uncle is using his power and discretion as the GP to limit my mother's monthly income from the partnership. Although the expense he has incurred each month could be con strewed as legitimate. He and my mother both had legal representation to try to resolve the situation. My uncle paid his legal fees through the company.
Whether or not a bankruptcy filing of a limited partnership mandate the dissolution of the partnership depends upon what the presumed written partnership agreement states. If there is no written partnership agreement, the bankruptcy typically will have no effect on ending the partnership as a matter of law.
If the partnership agreement states that the bankruptcy filing will end the partnership, then at the option of the other partner, the union can be considered ended.
I suggest that your mother consult with a business attorney about the situation you are writing about.
