SB657: Bill Text

SB657,59,15 (3) In a dissolution and winding up of a partnership, a transferee is entitled to an account of the partnership's transactions only from the date of dissolution.

SB657,59,17 (4) A partnership need not give effect to a transferee's rights under this section until the partnership knows or has notice of the transfer.

SB657,59,20 (5) A transfer of a transferable interest in violation of a valid restriction on transfer contained in the partnership agreement is ineffective if the intended transferee has knowledge or notice of the restriction at the time of transfer.

SB657,59,24 (6) Except as otherwise provided in s. 178.0601 (4) (b), if a partner transfers a transferable interest, the transferor retains the rights of a partner other than the transferable interest transferred and retains all the duties and obligations of a partner.

SB657,60,4 (7) If a partner transfers a transferable interest to a person that becomes a partner with respect to the transferred interest, the transferee is liable for the partner's obligations under ss. 178.0404 and 178.0407 known to the transferee when the transferee becomes a partner.

SB657,60,10 178.0504 Charging order. (1) On application by a judgment creditor of a partner or transferee, a court may enter a charging order against the transferable interest of the judgment debtor for the unsatisfied amount of the judgment. A charging order constitutes a lien on a judgment debtor's transferable interest and requires the partnership to pay over to the person to which the charging order was issued any distribution that otherwise would be paid to the judgment debtor.

SB657,60,12 (2) To the extent necessary to effectuate the collection of distributions pursuant to a charging order in effect under sub. (1), the court may do any of the following:

SB657,60,14 (a) Appoint a receiver of the distributions subject to the charging order, with the power to make all inquiries the judgment debtor might have made.

SB657,60,15 (b) Make all other orders necessary to give effect to the charging order.

SB657,60,20 (3) Upon a showing that distributions under a charging order will not pay the judgment debt within a reasonable time, the court may foreclose the lien and order the sale of the transferable interest. The purchaser at the foreclosure sale obtains only the transferable interest, does not thereby become a partner, and is subject to s. 178.0503.

SB657,60,24 (4) At any time before foreclosure under sub. (3), the partner or transferee whose transferable interest is subject to a charging order under sub. (1) may extinguish the charging order by satisfying the judgment and filing a certified copy of the satisfaction with the court that issued the charging order.

SB657,61,4 (5) At any time before foreclosure under sub. (3), a partnership or one or more partners whose transferable interests are not subject to the charging order may pay to the judgment creditor the full amount due under the judgment and thereby succeed to the rights of the judgment creditor, including the charging order.

SB657,61,6 (6) This chapter does not deprive any partner or transferee of the benefit of any exemption law applicable to the transferable interest of the partner or transferee.

SB657,61,10 (7) This section provides the exclusive remedy by which a person seeking, in the capacity of a judgment creditor, to enforce a judgment against a partner or transferee may satisfy the judgment from the judgment debtor's transferable interest.

SB657,61,12 178.0505 Power of legal representative of deceased partner. If a partner dies, the deceased partner's legal representative may exercise any of the following:

SB657,61,13 (1) The rights of a transferee provided in s. 178.0503 (3).

SB657,61,15 (2) For purposes of settling the estate, the rights the deceased partner had under s. 178.0408.

SB657,61,16 subchapter vi

SB657,61,17 dissociation

SB657,61,19 178.0601 Events causing dissociation. A person is dissociated as a partner when any of the following applies:

SB657,61,22 (1) The partnership knows or has notice of the person's express will to withdraw as a partner, but, if the person has specified a withdrawal date later than the date the partnership knew or had notice, on that later date.

SB657,61,24 (2) An event stated in the partnership agreement as causing the person's dissociation occurs.

SB657,61,25 (3) The person is expelled as a partner pursuant to the partnership agreement.

SB657,62,2 (4) The person is expelled as a partner by the affirmative vote or consent of all the other partners if any of the following applies:

SB657,62,4 (a) It is unlawful to carry on the partnership business with the person as a partner.

SB657,62,7 (b) There has been a transfer of all of the person's transferable interest in the partnership, other than a transfer for security purposes or the entry of a charging order that is in effect under s. 178.0504 and that has not been foreclosed.

SB657,62,8 (c) The person is an entity and all of the following apply:

SB657,62,13 1. The partnership notifies the person that it will be expelled as a partner because the person has filed a statement of dissolution or the equivalent, the person has been administratively dissolved, the person's charter or the equivalent has been revoked, or the person's right to conduct business has been suspended by the jurisdiction of the person's governing law.

SB657,62,17 2. The statement of dissolution or the equivalent has not been withdrawn, rescinded, or revoked, or the person's charter or the equivalent or right to conduct business has not been reinstated, within 90 days after the notification under subd. 1.

SB657,62,19 (d) The person is an unincorporated entity that has been dissolved and whose activities and affairs are being wound up.

SB657,62,21 (5) On application by the partnership or another partner, the person is expelled as a partner by judicial order because the person has done any of the following:

SB657,62,23 (a) Engaged, or is engaging, in wrongful conduct that has affected adversely and materially, or will affect adversely and materially, the partnership's business.

SB657,63,3 (b) Committed willfully or persistently, or is committing willfully or persistently, a material breach of the partnership agreement or a duty or obligation under s. 178.0409.

SB657,63,6 (c) Engaged, or is engaging, in conduct relating to the partnership's business which makes it not reasonably practicable to carry on the business with the person as a partner.

SB657,63,7 (6) Any of the following applies to the person:

SB657,63,8 (a) The person becomes a debtor in bankruptcy.

SB657,63,9 (b) The person signs an assignment for the benefit of creditors.

SB657,63,11 (c) The person seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of the person or of all or substantially all the person's property.

SB657,63,12 (7) In the case of an individual, any of the following applies to the individual:

SB657,63,13 (a) The individual dies.

SB657,63,14 (b) A guardian or general conservator for the individual is appointed.

SB657,63,17 (c) A court orders that the individual has otherwise become incapable of performing the individual's duties as a partner under this chapter or the partnership agreement.

SB657,63,20 (8) In the case of a person that is a testamentary or living trust or is acting as a partner by virtue of being a trustee of such a trust, the trust's entire transferable interest in the partnership is distributed.

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.