Question

Please provide a reasoning paragraph serving as a narrative.

Jumbo Subs, L.P., is a limited partnership. It has two general partners, Albert and Brian, who contributed capital to the partnership of $100,000 and $50,000, respectively. There are three limited partners who each contributed $50,000 to purchase their limited partnership interests. Business has gone badly for the partnership and the general partners decide to dissolve the partnership and wind up its affairs. The remaining assets of the business are worth $300,00 in liquidation value. There are remaining debts to outside creditors of $60,000, and $40,000 is owed to Albert for advances he made to the partnership to try to keep it afloat. Another competing sub shop has just closed and the limited partners, whp are not asked their opinions, want Jumbo Subs, L.P. to continue in business, thinking its business will improve immediately, and file a suit against the general partners to compel this result. Should the court order the partnership to continue? If not, how will the remaining assets of Jumbo Subs be distributed on its winding up?

Answer 1

The court never orders to continue the partnership because the limited partners have no rights in the management and day to day affairs of the company.

Legally It is only the general partners who can take the business decisions.

The complaint filed against the general partners will not exist.

The remaining assets can be distributed among all the partners in the ratio as per the agreement.

In case if no agreement, it can be distributed according to the capital contribution of each partners.