18383 bankruptcy charge or death unless the partners

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18.3.8.3 Bankruptcy, charge or death Unless the partners agree otherwise, a general partnership would dissolve by the death or bankruptcy of any partner. Moreover, other partners may choose to dissolve the partnership if any partner uses his share of the business as security for a personal debt – s. 33. 18.3.8.4 Illegality A partnership will dissolve if it has become illegal for the partnership or business to continue or if it has become illegal for the partners or any of them to continue in the partnership – s. 34. Download free eBooks at bookboon.com
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BUSINESS ORGANISATIONS AND AGENCY PARTNERSHIPS 346 18.3.8.5 Court order A court may, on application by or on behalf of any partner, order the dissolution of the firm. The order of dissolution could be given because: • A partner has become insane or of unsound mind • A partner has become permanently incapable of performing his responsibilities • A partner has conducted himself in a manner prejudicial to the business A partner has persistently breached the partnership agreement or acted in a manner making it impracticable for others to remain in partnership with him • The business can only be operated at a loss • It is just and equitable in the circumstances to dissolve the partnership – s. 35. If a partner had joined for a fix term and has paid a premium but the firm is dissolved before the expiration of that term, that partner would be entitled to a refund of part of his premium as appropriate. However, there will be no refund if the dissolution was due to the fault of the partner or if there is no right to a return of premium in the partnership agreement – s. 40. Download free eBooks at bookboon.com Click on the ad to read more
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BUSINESS ORGANISATIONS AND AGENCY 347 PARTNERSHIPS If a partner had died or ceased to be a partner but the surviving partners continue the business with assets of that partner, that partner or his estate will be entitled to a share of the profits in proportion to his asset unless the other partners had bought out his interest – s. 42. If the share of profits is not paid, it will remain a debt owed to the partner – s. 43. 18.3.9 WINDING UP OF PARTNERSHIPS After a partnership has been dissolved, its affairs will have to be wound up. The authority of a partner (except one who has become bankrupt) to bind the firm continues after its dissolution for the purpose of winding up the affairs of the firm and outstanding transactions – s. 38. Following dissolution, any losses or debts would be paid first from the profits, then from assets, and then from the personal assets of the partners in accordance with their profit-sharing formula. Thereafter, any money and assets of the partnership should be used to settle the liabilities of the firm; to pay back to the partners any advances they had given to the firm; and to return the partners’ capital contributions. Then any left-over would be shared by the partners according to the firms’ profit-sharing formula (s 44), provided that any money they owe to the firm has been deducted – s. 39).
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