SB657: Bill Text

SB657,63,23 (9) In the case of a person that is an estate or is acting as a partner by virtue of being a personal representative of an estate, the estate's entire transferable interest in the partnership is distributed.

SB657,63,25 (10) In the case of a person that is not an individual, the existence of the person terminates.

SB657,64,1 (15) The partnership dissolves and completes winding up.

SB657,64,4 178.0602 Power to dissociate as partner; wrongful dissociation. (1) A person has the power to dissociate as a partner at any time, rightfully or wrongfully, by withdrawing as a partner by express will under s. 178.0601 (1).

SB657,64,6 (2) A person's dissociation as a partner is wrongful only if any of the following applies:

SB657,64,8 (a) The dissociation is in breach of an express provision of the partnership agreement.

SB657,64,11 (b) In the case of a partnership for a definite term or particular undertaking, the dissociation occurs before the expiration of the term or the completion of the undertaking and any of the following applies:

SB657,64,15 1. The person withdraws as a partner by express will, unless the withdrawal follows not later than 90 days after another person's dissociation by death or otherwise under s. 178.0601 (6) to (10) or wrongful dissociation under this subsection.

SB657,64,16 2. The person is expelled as a partner by judicial order under s. 178.0601 (5).

SB657,64,17 3. The person is dissociated under s. 178.0601 (6).

SB657,64,20 4. In the case of a person that is not a trust other than a business trust, an estate, or an individual, the person is expelled or otherwise dissociated because it willfully dissolved or terminated.

SB657,64,24 (3) A person that wrongfully dissociates as a partner is liable to the partnership and to the other partners for damages caused by the dissociation. The liability is in addition to any debt, obligation, or other liability of the partner to the partnership or the other partners.

SB657,65,3 178.0603 Effect of dissociation. (1) If a person's dissociation results in a dissolution and winding up of the partnership business, subch. VIII applies; otherwise, subch. VII applies.

SB657,65,4 (2) If a person is dissociated as a partner, all of the following apply:

SB657,65,6 (a) The person's right to participate in the management and conduct of the partnership's business terminates, except as otherwise provided in s. 178.0802 (3).

SB657,65,10 (b) The person's duties and obligations under s. 178.0409 end with regard to matters arising and events occurring after the person's dissociation, except to the extent the partner participates in winding up the partnership's business pursuant to s. 178.0802.

SB657,65,13 (3) A person's dissociation does not of itself discharge the person from any debt, obligation, or other liability to the partnership or the other partners which the person incurred while a partner.

SB657,65,14 subchapter vii

SB657,65,15 PERSON'S dissociation AS

SB657,65,16 A PARTNER when business

SB657,65,17 not wound up

SB657,65,22 178.0701 Purchase of interest of person dissociated as partner. (1) If a person is dissociated as a partner without the dissociation resulting in a dissolution and winding up of the partnership business under s. 178.0801, the partnership shall cause the person's interest in the partnership to be purchased for a buyout price determined pursuant to sub. (2).

SB657,66,2 (2) The buyout price of the interest of a person dissociated as a partner is the amount that would have been distributable to the person under s. 178.0806 (2) if, on the date of dissociation, the assets of the partnership were sold and the partnership were wound up, with the sale price equal to the greater of the liquidation value or the value based on a sale of the entire business as a going concern without the person.

SB657,66,7 (3) Interest accrues on the buyout price from the date of dissociation to the date of payment, but damages for wrongful dissociation under s. 178.0602 (2), and, at the option of the partnership, some or all other amounts owing, whether or not presently due, from the person dissociated as a partner to the partnership, must be offset against the buyout price.

SB657,66,11 (4) A partnership shall defend, indemnify, and hold harmless a person dissociated as a partner whose interest is being purchased against all partnership liabilities, whether incurred before or after the dissociation, except liabilities incurred by an act of the person under s. 178.0702.

SB657,66,16 (5) If no agreement for the purchase of the interest of a person dissociated as a partner is reached within 120 days after a written demand for payment, the partnership shall pay, or cause to be paid, in money to the person the amount the partnership estimates to be the buyout price and accrued interest, reduced by any offsets and accrued interest under sub. (3).

SB657,66,21 (6) If a deferred payment is authorized under sub. (8), the partnership may tender a written offer to pay the amount it estimates to be the buyout price and accrued interest, reduced by any offsets under sub. (3), stating the time of payment, the amount and type of security for payment, and the other terms and conditions of the obligation.

SB657,66,23 (7) The payment or tender required by sub. (5) or (6) must be accompanied by the following:

SB657,66,25 (a) A statement of partnership assets and liabilities as of the date of dissociation.

SB657,67,2 (b) The latest available partnership balance sheet and income statement, if any.

SB657,67,3 (c) An explanation of how the estimated amount of the payment was calculated.

SB657,67,7 (d) Written notice that the payment is in full satisfaction of the obligation to purchase unless, not later than 120 days after the written notice, the person dissociated as a partner commences an action to determine the buyout price, any offsets under sub. (3), or other terms of the obligation to purchase.

SB657,67,13 (8) A person that wrongfully dissociates as a partner before the expiration of a definite term or the completion of a particular undertaking is not entitled to payment of any part of the buyout price until the expiration of the term or completion of the undertaking, unless the person establishes to the satisfaction of the court that earlier payment will not cause undue hardship to the business of the partnership. A deferred payment must be adequately secured and bear interest.

SB657,68,3 (9) A person dissociated as a partner may maintain an action against the partnership, pursuant to s. 178.0410 (2), to determine the buyout price of that person's interest, any offsets under sub. (3), or other terms of the obligation to purchase. The action must be commenced not later than 120 days after the partnership has tendered payment or an offer to pay in accordance with subs. (5) to (8) to the extent applicable or within one year after written demand for payment if no payment or offer to pay is tendered. The court shall determine the buyout price of the person's interest, any offset due under sub. (3), and accrued interest, and enter judgment for any additional payment or refund. If deferred payment is authorized under sub. (8), the court shall also determine the security for payment and other terms of the obligation to purchase. The court may assess reasonable attorney fees and the fees and expenses of appraisers or other experts for a party to the action, in amounts the court finds equitable, against a party that the court finds acted arbitrarily, vexatiously, or not in good faith. The finding may be based on the partnership's failure to tender payment or an offer to pay or to comply with sub. (7).

SB657,68,9 178.0702 Power to bind and liability of person dissociated as partner. (1) After a person is dissociated as a partner without the dissociation resulting in a dissolution and winding up of the partnership business and before the partnership is merged out of existence or converted under subch. XI, or dissolved, the partnership is bound by an act of the person with respect to a transaction with another party only if all of the following apply:

SB657,68,11 (a) The act would have bound the partnership under s. 178.0301 before dissociation.

SB657,68,13 (b) At the time the other party enters into the transaction, less than 2 years has passed since the dissociation.

SB657,68,16 (c) At the time the other party enters into the transaction, the other party does not know or have notice of the dissociation and reasonably believes that the person is a partner.

SB657,68,18 (2) If a partnership is bound under sub. (1), the person dissociated as a partner which caused the partnership to be bound is liable to all of the following:

SB657,68,20 (a) The partnership, for any damage caused to the partnership arising from the obligation incurred under sub. (1).

SB657,68,23 (b) If a partner or another person dissociated as a partner is liable for the obligation, the partner or other person, for any damage caused to the partner or other person arising from the liability.

SB657,69,3 178.0703 Liability of person dissociated as partner to other persons. (1) Except as otherwise provided in sub. (2) or s. 178.0308 (1), a person dissociated as a partner is not liable for a partnership obligation incurred after dissociation.

SB657,69,5 (2) A person that is dissociated as a partner is liable to a party on a transaction entered into by the partnership after the dissociation only if all of the following apply:

SB657,69,7 (a) The person would have been liable on the transaction had the person not been dissociated.

SB657,69,9 (b) At the time the other party enters into the transaction, less than 2 years has passed since the dissociation.

SB657,69,12 (c) At the time the other party enters into the transaction, the other party does not have knowledge or notice of the dissociation and reasonably believes that the person is a partner.

SB657,69,15 (3) By agreement with a creditor of a partnership and the partnership, a person dissociated as a partner may be released from liability for a debt, obligation, or other liability of the partnership.

SB657,69,20 (4) A person dissociated as a partner is released from liability for a debt, obligation, or other liability of the partnership if the partnership's creditor, with knowledge or notice of the person's dissociation but without the person's consent, agrees to a material alteration in the nature or time of payment of the debt, obligation, or other liability.

SB657,69,24 178.0704 Statement of dissociation. (1) A person dissociated as a partner or the partnership may deliver to the department for filing a statement of dissociation stating the name of the partnership and that the person has dissociated from the partnership.

SB657,70,2 (2) A statement of dissociation is a limitation on the authority of a person dissociated as a partner for the purposes of s. 178.0303.

SB657,70,7 178.0705 Continued use of partnership name. Continued use of a partnership name, or the name of a person dissociated as a partner as part of the partnership name, by partners continuing the business does not of itself make the person dissociated as a partner liable for an obligation of the partners or the partnership continuing the business.

SB657,70,8 subchapter viii

SB657,70,9 DISSOLUTION AND winding up

SB657,70,11 178.0801 Events causing dissolution. A partnership is dissolved, and its business must be wound up, upon the occurrence of any of the following:

SB657,70,12 (1) In a partnership at will, any of the following:

SB657,70,16 (a) The partnership knows or has notice of a person's express will to withdraw as a partner, other than a partner that has dissociated under s. 178.0601 (2) to (10), but, if the person has specified a withdrawal date later than the date the partnership knew or had notice, on the later date.

SB657,70,18 (b) The affirmative vote or consent of all the partners to wind up the partnership business.

SB657,70,20 (2) In a partnership for a definite term or particular undertaking, any of the following:

SB657,70,25 (a) Within 90 days after a person's dissociation by death or otherwise under s. 178.0601 (6) to (10) or wrongful dissociation under s. 178.0602 (2), the affirmative vote or consent of at least half of the remaining partners to wind up the partnership business, for which purpose a person's rightful dissociation pursuant to s. 178.0602 (2) (b) 1. constitutes that partner's consent to wind up the partnership business.

SB657,71,2 (b) The affirmative vote or consent of all the partners to wind up the partnership business.

SB657,71,3 (c) The expiration of the term or the completion of the undertaking.

SB657,71,5 (3) An event or circumstance that the partnership agreement states causes dissolution.

SB657,71,7 (4) On application by a partner, the entry by the circuit court of an order dissolving the partnership on any of the following grounds:

SB657,71,9 (a) That the conduct of all or substantially all the partnership's business is unlawful.

SB657,71,11 (b) That the economic purpose of the partnership is likely to be unreasonably frustrated.

SB657,71,14 (c) That another partner has engaged in conduct relating to the partnership business which makes it not reasonably practicable to carry on the business in partnership with that partner.

SB657,71,16 (d) That it is otherwise not reasonably practicable to carry on the partnership business in conformity with the partnership agreement.

SB657,71,19 (5) On application by a transferee, the entry by the circuit court of an order dissolving the partnership on the ground that it is equitable to wind up the partnership business under any of the following circumstances:

SB657,71,22 (a) 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.

SB657,71,24 (b) 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.

SB657,72,2 (6) The passage of 90 consecutive days during which the partnership does not have at least 2 partners.

SB657,72,5 178.0802 Winding up. (1) A dissolved partnership shall wind up its business and, except as otherwise provided in s. 178.0803, the partnership continues after dissolution only for the purpose of winding up.

SB657,72,8 (2) (a) In winding up its business, the partnership shall discharge the partnership's debts, obligations, and other liabilities, settle and close the partnership's business, and marshal and distribute the assets of the partnership.

SB657,72,9 (b) In winding up its business, the partnership may do any of the following:

SB657,72,11 1. Deliver to the department for filing a statement of dissolution stating the name of the partnership and that the partnership is dissolved.

SB657,72,13 2. Preserve the partnership business and property as a going concern for a reasonable time.

SB657,72,15 3. Prosecute and defend actions and proceedings, whether civil, criminal, or administrative.

SB657,72,16 4. Transfer the partnership's property.

SB657,72,17 5. Settle disputes by mediation or arbitration.

SB657,72,19 6. Deliver to the department for filing a statement of termination stating the name of the partnership and that the partnership is terminated.

SB657,72,20 7. Perform other acts necessary or appropriate to the winding up.

SB657,72,22 (3) A person whose dissociation as a partner resulted in dissolution may participate in winding up as if still a partner, unless the dissociation was wrongful.

SB657,73,7 (4) If a dissolved partnership does not have a partner and no person has the right to participate in winding up under sub. (3), the personal or legal representative of the last person to have been a partner may wind up the partnership's business. If no person has or exercises the right to participate in winding up, a person to wind up the partnership's business may be appointed by the affirmative vote or consent of transferees owning a majority of the rights to receive distributions at the time the consent is to be effective. A person appointed under this subsection has the powers of a partner under s. 178.0804 but is not liable for the debts, obligations, and other liabilities of the partnership solely by reason of having or exercising those powers or otherwise acting to wind up the partnership's business.

SB657,73,11 (5) On the application of any partner or person entitled under sub. (3) to participate in winding up, the circuit court may order judicial supervision of the winding up of a dissolved partnership, including the appointment of a person to wind up the partnership's business, if any of the following applies:

SB657,73,13 (a) The partnership does not have a partner and within a reasonable time following the dissolution no person has been appointed under sub. (4).

SB657,73,14 (b) The applicant establishes other good cause.

SB657,73,18 178.0803 Rescinding dissolution. (1) A partnership may rescind its dissolution, unless a statement of termination applicable to the partnership has become effective or the circuit court has entered an order under s. 178.0801 (4) or (5) dissolving the partnership.

SB657,73,19 (2) Rescinding dissolution under this section requires all of the following:

SB657,73,20 (a) The affirmative vote or consent of each partner.