Read on Twitter
When a general partnership is required to "wind up" (i.e., terminate). A thread --
1/ Section .051 of Chapter 11 of the Texas Business Organizations Code requires winding up of a general partnership in five instances:
1) On the expiration of the partnership of any duration specified in the partnership agreement (Hereinafter "PA");
2) By voluntary decision;
1) On the expiration of the partnership of any duration specified in the partnership agreement (Hereinafter "PA");
2) By voluntary decision;
2/
3) On an event specified in the PA;
4) On an event specified somewhere else in the code; and
5) By court decree
3) On an event specified in the PA;
4) On an event specified somewhere else in the code; and
5) By court decree
3/
Each of the alternatives mentioned above comes with its own procedures and issues of winding up, including:
a) How many of the partners are required to make such a decision (See 11.057(a)&(b)?
b) Can the PA limit the requirements of winding up
Each of the alternatives mentioned above comes with its own procedures and issues of winding up, including:
a) How many of the partners are required to make such a decision (See 11.057(a)&(b)?
b) Can the PA limit the requirements of winding up
4/
c) Can the partnership revoke its decision to wind up, and if so, how can revocation be approved?
These questions can be answered by carefully following the string of cross-references mentioned in burdensome and relentless code provision -- 11.057
c) Can the partnership revoke its decision to wind up, and if so, how can revocation be approved?
These questions can be answered by carefully following the string of cross-references mentioned in burdensome and relentless code provision -- 11.057
5/
11.057 provides for the answers to a lot of questions left up-in-the-air in 11.051. Specifically, 11.057 tells us:
1) How many of the partners are required to make the decision to terminate under 11.051(1),(2), and (3)
2) Events that could lead to a winding up under 11.051(4)
11.057 provides for the answers to a lot of questions left up-in-the-air in 11.051. Specifically, 11.057 tells us:
1) How many of the partners are required to make the decision to terminate under 11.051(1),(2), and (3)
2) Events that could lead to a winding up under 11.051(4)
6/
3) How some of those events specified in 11.057, which are events that require a winding up of the partnership under 11.051(4), can continue notwithstanding the request to terminate and also provide the means for canceling/or "revoking" the request for termination.
3) How some of those events specified in 11.057, which are events that require a winding up of the partnership under 11.051(4), can continue notwithstanding the request to terminate and also provide the means for canceling/or "revoking" the request for termination.
7/
4) And finally, what a "majority-in-interest" means. Wait, where does a "majority-in-interest" come from? Alas, I am not going to dive into that because this thread will be way too long. That is why you need to hire a lawyer if you are thinking about starting up a business.
4) And finally, what a "majority-in-interest" means. Wait, where does a "majority-in-interest" come from? Alas, I am not going to dive into that because this thread will be way too long. That is why you need to hire a lawyer if you are thinking about starting up a business.
8/
But Sammy, "I don't need a lawyer because we are just two dudes working together to get some cash, man. We are not a corporation or an LLC or anything like that. Just two dudes. We don't want suits to get involved."
Well, my dudes, whether you like it or not, (important)
But Sammy, "I don't need a lawyer because we are just two dudes working together to get some cash, man. We are not a corporation or an LLC or anything like that. Just two dudes. We don't want suits to get involved."
Well, my dudes, whether you like it or not, (important)
9/
. . . you have just formed a business entity. A general partnership. Just like that. So if you stop doing business, or one partner dies, or you wrongfully expel your friend because he is a crappy business partner, you (and your business) may be liable and subject to suit.
. . . you have just formed a business entity. A general partnership. Just like that. So if you stop doing business, or one partner dies, or you wrongfully expel your friend because he is a crappy business partner, you (and your business) may be liable and subject to suit.
10/
So, what does this all mean?
Hire a lawyer to draft your PA. Even if you are just two dudes.
So, what does this all mean?
Hire a lawyer to draft your PA. Even if you are just two dudes.
How'd I do @ProfJoeLeahy ?
