TITLE 6

Commerce and Trade

SUBTITLE II

Other Laws Relating to Commerce and Trade

CHAPTER 15. DELAWARE REVISED UNIFORM PARTNERSHIP ACT

Subchapter VIII. Winding Up Partnership Business or Affairs


A partnership is dissolved, and its business must be wound up, only upon the occurrence of any of the following events:

(1) In a partnership at will, the partnership's having notice from a partner, other than a partner who is dissociated under § 15-601(2) through (12) of this title, of that partner's express will to withdraw as a partner, on a later date specified by the partner in the notice or, if no later date is specified, then upon receipt of notice;

(2) In a partnership for a definite term or particular undertaking:

(i) Within 90 days after a partner's dissociation by death or otherwise under § 15-601(6) through (12) of this title or wrongful dissociation under § 15-602(b) of this title, at least half of the remaining partners express the will to wind up the partnership business, for which purpose a partner's rightful dissociation pursuant to § 15-602(b)(2)(i) of this title constitutes the expression of that partner's will to wind up the partnership business;

(ii) The express will of all of the partners to wind up the partnership business or affairs; or

(iii) The expiration of the term or the completion of the undertaking;

(3) An event agreed to in the partnership agreement resulting in the winding up of the partnership business or affairs;

(4) An event that makes it unlawful for all or substantially all of the business or affairs of the partnership to be continued, but a cure of such illegality within 90 days after the partnership has notice of the event is effective retroactively to the date of the event for purposes of this section;

(5) On application by or for a partner to the Court of Chancery, the entry of a decree of dissolution of a partnership by the Court of Chancery upon a determination by the Court of Chancery that it is not reasonably practicable to carry on the partnership business, purpose or activity in conformity with the partnership agreement; or

(6) On application by a transferee of a partner's economic interest to the Court of Chancery, a determination by the Court of Chancery that it is equitable to wind up the partnership business or affairs:

(i) After the expiration of the term or completion of the undertaking, if the partnership was for a definite term or particular undertaking at the time of the transfer or entry of the charging order that gave rise to the transfer; or

(ii) At any time, if the partnership was a partnership at will at the time of the transfer or entry of the charging order that gave rise to the transfer.

72 Del. Laws, c. 151, § 1; 72 Del. Laws, c. 390, § 22.;

(a) Subject to subsection (b) of this section, a partnership continues after dissolution only for the purpose of winding up its business or affairs. The partnership is terminated when the winding up of its business or affairs is completed.

(b) At any time after the dissolution of a partnership and before the winding up of its business or affairs is completed, all of the partners, including any dissociating partner other than a wrongfully dissociating partner, may waive the right to have the partnership's business or affairs wound up and the partnership terminated. In that event:

(1) The partnership resumes carrying on its business or affairs as if dissolution had never occurred, and any liability incurred by the partnership or a partner after the dissolution and before the waiver is determined as if dissolution had never occurred; and

(2) The rights of a third party accruing under § 15-804(1) of this title or arising out of conduct in reliance on the dissolution before the third party knew or received a notification of the waiver may not be adversely affected.

72 Del. Laws, c. 151, § 1.;

(a) A partner at the time of dissolution, including a partner who has dissociated but not wrongfully, may participate in winding up the partnership's business or affairs, but on application of any partner or a partner's legal representative or transferee, the Court of Chancery for good cause shown, may order judicial supervision of the winding up.

(b) The legal representative of the last surviving partner may wind up a partnership's business or affairs.

(c) The persons winding up the partnership's business or affairs may, in the name of, and for and on behalf of, the partnership, prosecute and defend suits, whether civil, criminal or administrative, gradually settle and close the partnership's business or affairs, dispose of and convey the partnership's property, discharge or make reasonable provision for the partnership's liabilities, distribute to the partners pursuant to § 15-807 of this title any remaining assets of the partnership, and perform other acts which are necessary or convenient to the winding up of the partnership's business or affairs.

72 Del. Laws, c. 151, § 1.;

Subject to § 15-805 of this title, a partnership is bound by a partner's act after dissolution that:

(1) Is appropriate for winding up the partnership business or affairs; or

(2) Would have bound the partnership under § 15-301 of this title before dissolution, if the other party to the transaction did not have notice of the dissolution.

72 Del. Laws, c. 151, § 1.;

(a) After dissolution, a partnership may file a statement of dissolution stating the name of the partnership and that the partnership has dissolved and is winding up its business or affairs.

(b) A statement of dissolution cancels a filed statement of partnership existence for the purposes of § 15-303(b) of this title and is a limitation on authority for the purposes of § 15-303(c) of this title.

(c) For the purposes of §§ 15-301 and 15-804 of this title, a person not a partner is deemed to have notice of the dissolution and the limitation on the partners' authority as a result of a statement of dissolution 60 days after it is filed.

(d) After filing a statement of dissolution, a dissolved partnership may file a statement of partnership existence which will operate with respect to a person not a partner as provided in § 15-303(b) and (c) of this title in any transaction, whether or not the transaction is appropriate for winding up the partnership business or affairs.

(e) If a partnership which has dissolved fails or refuses to file a statement of dissolution, any partner or dissociated partner who is or may be adversely affected by the failure or refusal may petition the Court of Chancery to direct the filing. If the Court finds that the statement of dissolution should be filed and that the partnership has failed or refused to do so, it shall enter an order granting appropriate relief.

72 Del. Laws, c. 151, § 1.;

(a) Except as otherwise provided in subsection (b) of this section and § 15-306 of this title, after dissolution a partner is liable to the other partners for the partner's share of any partnership obligation incurred under § 15-804 of this title.

(b) A partner who, with knowledge of the dissolution, causes the partnership to incur an obligation under § 15-804(2) of this title by an act that is not appropriate for winding up the partnership business or affairs is liable to the partnership for any damage caused to the partnership arising from the obligation.

72 Del. Laws, c. 151, § 1.;

(a) In winding up a partnership's business or affairs, the assets of the partnership, including the contributions of the partners required by this section, must be applied to pay or make reasonable provision to pay the partnership's obligations to creditors, including, to the extent permitted by law, partners who are creditors. Any surplus must be applied to pay in cash the net amount distributable to partners in accordance with their right to distributions under subsection (b) of this section.

(b) Each partner is entitled to a settlement of all partnership accounts upon winding up the partnership business or affairs. In settling accounts among the partners, profits and losses that result from the liquidation of the partnership assets must be credited and charged to the partners' accounts. The partnership shall make a distribution to a partner in an amount equal to any excess of the credits over the charges in the partner's account. A partner shall contribute to the partnership an amount equal to any excess of the charges over the credits in the partner's account but excluding from the calculation charges attributable to an obligation for which the partner is not personally liable under § 15-306 of this title.

(c) After the settlement of accounts, each partner shall contribute, in the proportion in which the partner shares partnership losses, the amount necessary to pay or make reasonable provision to pay partnership obligations that were not known at the time of the settlement and for which the partner is personally liable under § 15-306 of this title.

(d) If a partner fails to contribute, all of the other partners shall contribute, in the proportions in which those partners share partnership losses, the additional amount necessary to pay or make reasonable provision to pay the partnership obligations for which they are personally liable under § 15-306 of this title.

(e) A partner or partner's legal representative may recover from the other partners any contributions the partner makes to the extent the amount contributed exceeds that partner's share of the partnership obligations for which the partner is personally liable under § 15-306 of this title.

(f) The estate of a deceased partner is liable for the partner's obligation to contribute to the partnership.

(g) An assignee for the benefit of creditors of a partnership or a partner, or a person appointed by a court to represent creditors of a partnership or a partner, may enforce a partner's obligation to contribute to the partnership.

(h) A limited liability partnership which has dissolved (i) shall pay or make reasonable provision to pay all claims and obligations, including all contingent, conditional or unmatured contractual claims, known to the limited liability partnership, (ii) shall make such provision as will be reasonably likely to be sufficient to provide compensation for any claim against the limited liability partnership which is the subject of a pending action, suit or proceeding to which the limited liability partnership is a party and (iii) shall make such provision as will be reasonably likely to be sufficient to provide compensation for claims that have not been made known to the limited liability partnership or that have not arisen but that, based on facts known to the limited liability partnership, are likely to arise or to become known to the limited liability partnership within 10 years after the date of dissolution. If there are sufficient assets, such claims and obligations shall be paid in full and any such provision for payment made shall be made in full. If there are insufficient assets, such claims and obligations shall be paid or provided for according to their priority and, among claims of equal priority, ratably to the extent of assets available therefor. Any remaining assets shall be distributed as provided in this chapter. Any liquidating trustee winding up a limited liability partnership's affairs who has complied with this section shall not be personally liable to the claimants of the dissolved limited liability partnership by reason of such person's actions in winding up the limited liability partnership.

(i) A partner of a limited liability partnership who receives a distribution in violation of subsection (h) of this section, and who knew at the time of the distribution that the distribution violated subsection (h) of this section, shall be liable to the limited liability partnership for the amount of the distribution. For purposes of the immediately preceding sentence, the term "distribution'' shall not include amounts constituting reasonable compensation for present or past services or reasonable payments made in the ordinary course of business pursuant to a bona fide retirement plan or other benefits program. A partner of a limited liability partnership who receives a distribution in violation of subsection (h) of this section, and who did not know at the time of the distribution that the distribution violated subsection (h) of this section, shall not be liable for the amount of the distribution. Subject to subsection (j) of this section, this subsection shall not affect any obligation or liability of a partner of a limited liability partnership under an agreement or other applicable law for the amount of a distribution.

(j) Unless otherwise agreed, a partner of a limited liability partnership who receives a distribution from a limited liability partnership shall have no liability under this chapter or other applicable law for the amount of the distribution after the expiration of 3 years from the date of the distribution.

(k) Section 15-309 of this chapter shall not apply to a distribution to which this section applies.

72 Del. Laws, c. 151, § 1; 72 Del. Laws, c. 390, §§ 23, 24; 80 Del. Laws, c. 43, § 7.;