56a-701. Purchase of dissociated partner's interest.
56a-701
56a-701. Purchase of dissociated partner'sinterest.(a) If a partner is dissociated from apartnership without resulting in a dissolution and winding up ofthe partnership business under K.S.A. 56a-801, the partnership shallcause the dissociated partner's interest in the partnership to bepurchased for a buyout price determined pursuant to subsection (b).
(b) The buyout price of a dissociated partner's interestis the amount that would have been distributable to thedissociating partner under subsection (b) of K.S.A. 56a-807 if, onthe date ofdissociation, the assets of the partnership were sold at a priceequal to the greater of the liquidation value or the value based ona sale of the entire business as a going concern without thedissociated partner and the partnership were wound up as of thatdate. Interest must be paid from the date of dissociation to thedate of payment.
(c) Damages for wrongful dissociation under subsection (b) ofK.S.A. 56a-602, and all other amounts owing, whether or notpresently due,from the dissociated partner to the partnership, must be offsetagainst the buyout price. Interest must be paid from the date theamount owed becomes due to the date of payment.
(d) A partnership shall indemnify a dissociated partnerwhose interest is being purchased against all partnershipliabilities, whether incurred before or after the dissociation,except liabilities incurred by an act of the dissociated partnerunder K.S.A. 56a-702.
(e) If no agreement for the purchase of a dissociatedpartner's interest is reached within 120 days after a writtendemand for payment, the partnership shall pay, or cause to be paid,in cash to the dissociated partner the amount the partnershipestimates to be the buyout price and accrued interest, reduced byany offsets and accrued interest under subsection (c).
(f) If a deferred payment is authorized under subsection(h), the partnership may tender a written offer to pay the amountit estimates to be the buyout price and accrued interest, reducedby any offsets under subsection (c), stating the time of payment,the amount and type of security for payment, and the other termsand conditions of the obligation.
(g) The payment or tender required by subsection (e) or(f) must be accompanied by the following:
(1) A statement of partnership assets andliabilities as of the date of dissociation;
(2) the latest available partnership balance sheetand income statement, if any;
(3) an explanation of how the estimated amount ofthe payment was calculated; and
(4) written notice that the payment is in fullsatisfaction of the obligation to purchase unless, within 120 daysafter the written notice, the dissociated partner commences anaction to determine the buyout price, any offsets under subsection(c), or other terms of the obligation to purchase.
(h) A partner who wrongfully dissociates before theexpiration of a definite term or the completion of a particularundertaking is not entitled to payment of any portion of the buyoutprice until the expiration of the term or completion of theundertaking, unless the partner establishes to the satisfaction ofthe court that earlier payment will not cause undue hardship to thebusiness of the partnership. A deferred payment must be adequatelysecured and bear interest.
(i) A dissociated partner may maintain an action againstthe partnership, pursuant to subsection (b)(2)(ii) of K.S.A. 56a-405, to determinethe buyout price of that partner's interest, any offsets undersubsection (c), or other terms of the obligation to purchase. Theaction must be commenced within 120 days after the partnership hastendered payment or an offer to pay or within one year afterwritten demand for payment if no payment or offer to pay istendered. The court shall determine the buyout price of thedissociated partner's interest, any offset due under subsection(c), and accrued interest, and enter judgment for any additionalpayment or refund. If deferred payment is authorized undersubsection (h), the court shall also determine the security forpayment and other terms of the obligation to purchase. The courtmay assess reasonable attorney's fees and the fees and expenses ofappraisers or other experts for a party to the action, in amountsthe court finds equitable, against a party that the court findsacted arbitrarily, vexatiously, or not in good faith. The findingmay be based on the partnership's failure to tender payment or anoffer to pay or to comply with subsection (g).
History: L. 1998, ch. 93, § 33; Jan. 1, 1999.