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(a) In the case of a distribution described in s. 178.0102 (4) (a) 1. and 2., as of
10the earlier of the following:
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1. The date money or other property is transferred or debt is incurred by the
12limited liability partnership.
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2. The date the person entitled to the distribution ceases to own the interest
14or rights being acquired by the partnership in return for the distribution.
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(b) In the case of any distribution of indebtedness other than one under par. (a),
16as of the date the indebtedness is distributed.
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(c) In all cases other than those under par. (a) or (b), as of the following:
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1. The date the distribution is authorized, if the payment occurs not later than
19120 days after that date.
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2. The date the payment is made, if the payment occurs more than 120 days
21after the distribution is authorized.
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22(4) A limited liability partnership's indebtedness to a partner or transferee
23incurred by reason of a distribution made in accordance with this section is at parity
24with the partnership's indebtedness to its general, unsecured creditors, except to the
25extent subordinated by agreement.
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1(5) A limited liability partnership's indebtedness, including indebtedness
2issued as a distribution, is not a liability for purposes of sub. (1) if the terms of the
3indebtedness provide that payment of principal and interest is made only if and to
4the extent that a payment of a distribution could then be made under this section.
5If the indebtedness is issued as a distribution, each payment of principal or interest
6is treated as a distribution, the effect of which is measured on the date the payment
7is made.
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8(6) In measuring the effect of a distribution under s. 178.0806, the liabilities
9of a dissolved limited liability partnership do not include any claim that has been
10disposed of under s. 178.0807, 178.0808, or 178.0809.
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11178.0407 Liability for improper distributions by limited liability
12partnership. (1) Except as otherwise provided in sub. (2), if a partner of a limited
13liability partnership consents to a distribution made in violation of s. 178.0406 and
14in consenting to the distribution fails to comply with s. 178.0409, the partner is
15personally liable to the partnership for the amount of the distribution which exceeds
16the amount that could have been distributed without the violation of s. 178.0406.
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17(2) To the extent the partnership agreement of a limited liability partnership
18expressly relieves a partner of the authority and responsibility to consent to
19distributions and imposes that authority and responsibility on one or more other
20partners, the liability stated in sub. (1) applies to the other partners and not to the
21partner that the partnership agreement relieves of the authority and responsibility.
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22(3) A person that receives a distribution knowing that the distribution violated
23s. 178.0406 is personally liable to the limited liability partnership but only to the
24extent that the distribution received by the person exceeded the amount that could
25have been properly paid under s. 178.0406.
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1(4) A person against which an action is commenced because the person is liable
2under sub. (1) may do any of the following:
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(a) Implead any other person that is liable under sub. (1) and seek to enforce
4a right of contribution from the person.
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(b) Implead any person that received a distribution in violation of sub. (3) and
6seek to enforce a right of contribution from the person in the amount the person
7received in violation of sub. (3).
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8(5) An action under this section is barred unless commenced not later than 2
9years after the distribution.
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10178.0408 Rights to information of partners and persons dissociated as
11partner. (1) A partnership shall keep its books and records, if any, at its principal
12office.
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13(2) On reasonable notice, a partner may inspect and copy during regular
14business hours, at a reasonable location specified by the partnership, any record
15maintained by the partnership regarding the partnership's business, financial
16condition, and other circumstances, to the extent the information is material to the
17partner's rights and duties under the partnership agreement or this chapter.
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18(3) The partnership shall furnish to each partner all of the following:
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(a) Without demand, any information concerning the partnership's business,
20financial condition, and other circumstances which the partnership knows and is
21material to the proper exercise of the partner's rights and duties under the
22partnership agreement or this chapter, except to the extent the partnership can
23establish that it reasonably believes the partner already knows the information.
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(b) On demand, any other information concerning the partnership's business,
25financial condition, and other circumstances, except to the extent the demand or the
1information demanded is unreasonable or otherwise improper under the
2circumstances.
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3(4) The duty to furnish information under sub. (3) also applies to each partner
4on whom a demand is made to the extent the partner knows any of the information
5described in sub. (3).
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6(5) Subject to sub. (10), on 10 days' demand made in a record received by a
7partnership, a person dissociated as a partner may have access to information to
8which the person was entitled while a partner if all of the following apply:
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(a) The information pertains to the period during which the person was a
10partner.
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(b) The person seeks the information in good faith.
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(c) The person satisfies the requirements imposed on a partner by sub. (2).
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13(6) Not later than 10 days after receiving a demand under sub. (5), the
14partnership in a record shall inform the person that made the demand of all of the
15following:
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(a) The information that the partnership will provide in response to the
17demand and when and where the partnership will provide the information.
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(b) The partnership's reasons for declining, if the partnership declines to
19provide any demanded information.
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20(7) A partnership may charge a person that makes a demand under this section
21the reasonable costs of copying, limited to the costs of labor and material.
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22(8) A partner or person dissociated as a partner may exercise the rights under
23this section through an agent or, in the case of an individual under legal disability,
24a legal representative. Any restriction or condition imposed by the partnership
1agreement or under sub. (10) applies both to the agent or legal representative and
2to the partner or person dissociated as a partner.
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3(9) Subject to s. 178.0505, the rights under this section do not extend to a person
4as transferee.
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5(10) In addition to any restriction or condition stated in its partnership
6agreement, a partnership, as a matter within the ordinary course of its business, may
7impose reasonable restrictions and conditions on access to and use of information to
8be furnished under this section, including designating information confidential and
9imposing nondisclosure and safeguarding obligations on the recipient. In a dispute
10concerning the reasonableness of a restriction under this subsection, the partnership
11has the burden of proving reasonableness.
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12178.0409 Standards of conduct for partners. (1) A partner owes to the
13partnership and the other partners the duties of loyalty and care stated in subs. (2)
14and (3).
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15(2) The fiduciary duty of loyalty of a partner includes all of the following duties:
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(a) The duty to account to the partnership and hold as trustee for it any
17property, profit, or benefit derived by the partner in or from any of the following:
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1. The conduct or winding up of the partnership's business.
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2. A use by the partner of the partnership's property.
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3. The appropriation of a partnership opportunity.
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(b) The duty to refrain from dealing with the partnership in the conduct or
22winding up of the partnership business as or on behalf of a person having an interest
23adverse to the partnership.
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(c) The duty to refrain from competing with the partnership in the conduct of
25the partnership's business before the dissolution of the partnership.
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1(3) The duty of care of a partner in the conduct or winding up of the partnership
2business is to refrain from engaging in conduct for which relief or exoneration from
3liability is not permitted under s. 178.0105 (3) (h).
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4(4) A partner shall discharge the duties and obligations under this chapter or
5under the partnership agreement and exercise any rights thereunder consistently
6with the contractual obligation of good faith and fair dealing.
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7(5) A partner does not violate a duty or obligation under this chapter or under
8the partnership agreement solely because the partner's conduct furthers the
9partner's own interest.
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10(6) All the partners, or one or more disinterested partners with authority to act
11in the matter, may authorize or ratify, after full disclosure of all material facts, a
12specific act or transaction by a partner that otherwise would violate the duty of
13loyalty.
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14(7) It is a defense to a claim under sub. (2) (b) and any comparable claim in
15equity or at common law that the transaction was fair to the partnership.
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16(8) If, as permitted by sub. (6) or the partnership agreement, a partner enters
17into a transaction with the partnership which otherwise would be prohibited by sub.
18(2) (b), the partner's rights and obligations arising from the transaction are the same
19as those of a person that is not a partner.
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20178.0410 Actions by partnership and partners. (1) A partnership may
21maintain an action against a partner for a breach of the partnership agreement, or
22for the violation of a duty to the partnership, causing harm to the partnership.
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23(2) A partner may maintain an action against the partnership or another
24partner, with or without an accounting as to partnership business, to enforce the
25partner's rights and protect the partner's interests, including rights and interests
1under the partnership agreement or this chapter or arising independently of the
2partnership relationship.
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3(3) A right to an accounting on dissolution and winding up does not revive a
4claim barred by law.
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5178.0411 Continuation of partnership beyond definite term or
6particular undertaking. (1) If a partnership for a definite term or particular
7undertaking is continued, without an express agreement, after the expiration of the
8term or completion of the undertaking, the rights and duties of the partners remain
9the same as they were at the expiration or completion, so far as is consistent with a
10partnership at will.
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11(2) If the partners, or those of them who habitually acted in the business during
12the term or undertaking, continue the business without any settlement or
13liquidation of the partnership, they are presumed to have agreed that the
14partnership will continue.
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subchapter V
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TRANSFERABLE INTERESTS AND
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RIGHTS OF transferees and
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19178.0501 Partner not co-owner of partnership property. A partner is not
20a co-owner of partnership property and has no interest in partnership property
21which can be transferred, either voluntarily or involuntarily.
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22178.0502 Nature of transferable interest. A transferable interest is
23personal property.
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24178.0503 Transfer of transferable interest. (1) All of the following apply
25to a transfer, in whole or in part, of a transferable interest:
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1(a) It is permissible.
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(b) It does not by itself cause a person's dissociation as a partner or a dissolution
3and winding up of the partnership business.
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(c) Subject to s. 178.0505, it does not entitle the transferee to do any of the
5following:
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1. Participate in the management or conduct of the partnership's business.
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2. Except as otherwise provided in sub. (3), have access to records or other
8information concerning the partnership's business.
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9(2) A transferee has the right to all of the following:
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(a) To receive, in accordance with the transfer, distributions to which the
11transferor would otherwise be entitled.
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(b) To seek under s. 178.0801 (5) a judicial determination that it is equitable
13to wind up the partnership business.
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14(3) In a dissolution and winding up of a partnership, a transferee is entitled
15to an account of the partnership's transactions only from the date of dissolution.
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16(4) A partnership need not give effect to a transferee's rights under this section
17until the partnership knows or has notice of the transfer.
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18(5) A transfer of a transferable interest in violation of a valid restriction on
19transfer contained in the partnership agreement is ineffective if the intended
20transferee has knowledge or notice of the restriction at the time of transfer.
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21(6) Except as otherwise provided in s. 178.0601 (4) (b), if a partner transfers
22a transferable interest, the transferor retains the rights of a partner other than the
23transferable interest transferred and retains all the duties and obligations of a
24partner.
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1(7) If a partner transfers a transferable interest to a person that becomes a
2partner with respect to the transferred interest, the transferee is liable for the
3partner's obligations under ss. 178.0404 and 178.0407 known to the transferee when
4the transferee becomes a partner.
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5178.0504 Charging order. (1) On application by a judgment creditor of a
6partner or transferee, a court may enter a charging order against the transferable
7interest of the judgment debtor for the unsatisfied amount of the judgment. A
8charging order constitutes a lien on a judgment debtor's transferable interest and
9requires the partnership to pay over to the person to which the charging order was
10issued any distribution that otherwise would be paid to the judgment debtor.
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11(2) To the extent necessary to effectuate the collection of distributions pursuant
12to a charging order in effect under sub. (1), the court may do any of the following:
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(a) Appoint a receiver of the distributions subject to the charging order, with
14the power to make all inquiries the judgment debtor might have made.
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(b) Make all other orders necessary to give effect to the charging order.
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16(3) Upon a showing that distributions under a charging order will not pay the
17judgment debt within a reasonable time, the court may foreclose the lien and order
18the sale of the transferable interest. The purchaser at the foreclosure sale obtains
19only the transferable interest, does not thereby become a partner, and is subject to
20s. 178.0503.
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21(4) At any time before foreclosure under sub. (3), the partner or transferee
22whose transferable interest is subject to a charging order under sub. (1) may
23extinguish the charging order by satisfying the judgment and filing a certified copy
24of the satisfaction with the court that issued the charging order.
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1(5) At any time before foreclosure under sub. (3), a partnership or one or more
2partners whose transferable interests are not subject to the charging order may pay
3to the judgment creditor the full amount due under the judgment and thereby
4succeed to the rights of the judgment creditor, including the charging order.
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5(6) This chapter does not deprive any partner or transferee of the benefit of any
6exemption law applicable to the transferable interest of the partner or transferee.
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7(7) This section provides the exclusive remedy by which a person seeking, in
8the capacity of a judgment creditor, to enforce a judgment against a partner or
9transferee may satisfy the judgment from the judgment debtor's transferable
10interest.
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11178.0505 Power of legal representative of deceased partner. If a partner
12dies, the deceased partner's legal representative may exercise any of the following:
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13(1) The rights of a transferee provided in s. 178.0503 (3).
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14(2) For purposes of settling the estate, the rights the deceased partner had
15under s. 178.0408.
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subchapter vi
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dissociation
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18178.0601 Events causing dissociation. A person is dissociated as a partner
19when any of the following applies:
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20(1) The partnership knows or has notice of the person's express will to
21withdraw as a partner, but, if the person has specified a withdrawal date later than
22the date the partnership knew or had notice, on that later date.