Subchapter VI. Partner's Dissociation
TITLE 6
Commerce and Trade
SUBTITLE II
Other Laws Relating to Commerce and Trade
CHAPTER 15. DELAWARE REVISED UNIFORM PARTNERSHIP ACT
Subchapter VI. Partner's Dissociation
§ 15-601. Events causing partner's dissociation.
A partner is dissociated from a partnership upon the occurrence of any of the following events:
(1) the partnership's having notice of the partner's express will to withdraw as a partner on a later date specified by the partner in the notice or, if no later date is specified, then upon receipt of notice;
(2) an event agreed to in the partnership agreement as causing the partner's dissociation;
(3) the partner's expulsion pursuant to the partnership agreement;
(4) the partner's expulsion by the unanimous vote of the other partners if:
(i) it is unlawful to carry on the partnership business or affairs with that partner; or
(ii) there has been a transfer of all or substantially all of that partner's economic interest, other than a transfer for security purposes, or a court order charging the partner's interest which, in either case, has not been foreclosed;
(5) on application by or for the partnership or another partner to the Court of Chancery, the partner's expulsion by determination by the Court of Chancery because:
(i) the partner engaged in wrongful conduct that adversely and materially affected the partnership business or affairs;
(ii) the partner willfully or persistently committed a material breach of either the partnership agreement or of a duty owed to the partnership or the other partners; or
(iii) the partner engaged in conduct relating to the partnership business or affairs which makes it not reasonably practicable to carry on the business or affairs in partnership with the partner;
(6) The partner's:
a. Making an assignment for the benefit of creditors;
b. Filing a voluntary petition in bankruptcy;
c. Being adjudged a bankrupt or insolvent, or having entered against that partner an order for relief in any bankruptcy or insolvency proceeding;
d. Filing a petition or answer seeking for that partner any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation;
e. Filing an answer or other pleading admitting or failing to contest the material allegations of a petition filed against that partner in any proceeding of this nature;
f. Seeking, consenting to or acquiescing in the appointment of a trustee, receiver or liquidator of that partner or of all or any substantial part of that partner's properties; or
g. Failing, within 120 days after its commencement, to have dismissed any proceeding against that partner seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, or failing, within 90 days after the appointment without that partner's consent or acquiescence, to have vacated or stayed the appointment of a trustee, receiver or liquidator of that partner or of all or any substantial part of that partner's properties, or failing, within 90 days after the expiration of any such stay, to have the appointment vacated;
(7) in the case of a partner who is an individual:
(i) the partner's death;
(ii) the appointment of a guardian or general conservator for the partner; or
(iii) a judicial determination that the partner has otherwise become incapable of performing the partner's duties under the partnership agreement;
(8) in the case of a partner that is a trust or is acting as a partner by virtue of being a trustee of a trust, distribution of the trust's entire economic interest, but not merely by reason of the substitution of a successor trustee;
(9) in the case of a partner that is an estate or is acting as a partner by virtue of being a personal representative of an estate, distribution of the estate's entire economic interest, but not merely by reason of the substitution of a successor personal representative;
(10) the expiration of 90 days after the partnership notifies a corporate partner that it will be expelled because it has filed a certificate of dissolution or the equivalent, its existence has been terminated or its certificate of incorporation has been revoked, or its right to conduct business has been suspended by the jurisdiction of its incorporation, if there is no revocation of the certificate of dissolution or no reinstatement of its existence, its certificate of incorporation or its right to conduct business;
(11) a partnership, a limited liability company, a trust or a limited partnership that is a partner has been dissolved and its business is being wound up; or
(12) termination of a partner who is not an individual, partnership, corporation, trust, limited partnership, limited liability company or estate.
72 Del. Laws, c. 151, § 1; 72 Del. Laws, c. 390, § 20.;
§ 15-602. Partner's power to dissociate; wrongful dissociation.
(a) A partner has the power to dissociate at any time, rightfully or wrongfully, by express will pursuant to Section 15-601(1).
(b) A partner's dissociation is wrongful only if any of the following apply:
(1) it is in breach of an express provision of the partnership agreement; or
(2) in the case of a partnership for a definite term or particular undertaking, before the expiration of the term or the completion of the undertaking if any of the following apply:
(i) the partner withdraws by express will, unless the withdrawal follows within 90 days after another partner's dissociation by death or otherwise under Section 15-601(6) through (12) or wrongful dissociation under this subsection;
(ii) the partner is expelled by judicial determination under Section 15-601(5);
(iii) the partner is dissociated under Section 15-601(6); or
(iv) in the case of a partner who is not an individual, trust (other than a statutory trust), or estate, the partner is expelled or otherwise dissociated because it willfully dissolved or terminated.
(c) A partner who wrongfully dissociates is liable to the partnership and to the other partners for damages caused by the dissociation. Such liability is in addition to any other obligation of the partner to the partnership or to the other partners.
72 Del. Laws, c. 151, § 1; 73 Del. Laws, c. 329, § 13.;
§ 15-603. Effect of partner's dissociation.
(a) If a partner's dissociation results in a dissolution and winding up of the partnership business, Subchapter VIII applies; otherwise, Subchapter VII applies.
(b) Upon a partner's dissociation:
(1) the partner's right to participate in the management and conduct of the partnership business terminates, except as otherwise provided in Section 15-803;
(2) the partner's duty of loyalty under Section 15-404(b)(3) terminates; and
(3) the partner's duty of loyalty under Section 15-404(b)(1) and (2) and duty of care under Section 15-404(c) continue only with regard to matters arising and events occurring before the partner's dissociation, unless the partner participates in winding up the partnership's business pursuant to Section 15-803.
72 Del. Laws, c. 151, § 1.;