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45-20 Winding Up Partnership Business

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CHAPTER 45-20WINDING UP PARTNERSHIP BUSINESS45-20-01.(801) Events causing dissolution and winding up of partnershipbusiness.A partnership is dissolved, and its business must be wound up, only upon theoccurrence of any of the following events:1.In a partnership at will, the partnership's having notice from a partner, other than a<br>partner who is dissociated under subsections 2 through 10 of section 45-18-01, of<br>that partner's express will to withdraw as a partner, or on a later date specified by<br>the partner.2.In a partnership for a definite term or particular undertaking:a.Within ninety days after a partner's dissociation by death or otherwise under<br>subsections 6 through 10 of section 45-18-01 or wrongful dissociation under<br>subsection 2 of section 45-18-02, the express will of at least half of the<br>remaining partners to wind up the partnership business, for which purpose a<br>partner'srightfuldissociationunderparagraph 1ofsubdivision bofsubsection 2 of section 45-18-02 constitutes the expression of that partner's will<br>to wind up the partnership business;b.The express will of all of the partners to wind up the partnership business; orc.The expiration of the term or the completion of the undertaking.3.An event agreed to in the partnership agreement resulting in the winding up of the<br>partnership business.4.An event that makes it unlawful for all or substantially all of the business of the<br>partnership to be continued, but a cure of illegality within ninety days after notice to<br>the partnership of the event is effective retroactively to the date of the event for<br>purposes of this section.5.On application by a partner, a judicial determination that:a.The economic purpose of the partnership is likely to be unreasonably<br>frustrated;b.Another partner has engaged in conduct relating to the partnership business<br>which makes it not reasonably practicable to carry on the business in<br>partnership with that partner; orc.It is not otherwise reasonably practicable to carry on the partnership business in<br>conformity with the partnership agreement.6.On application by a transferee of a partner's transferable interest, a judicial<br>determination that it is equitable to wind up the partnership business:a.After the expiration of the term or completion of the undertaking, if the<br>partnership was for a definite term or particular undertaking at the time of the<br>transfer or entry of the charging order that gave rise to the transfer; orb.At any time, if the partnership was a partnership at will at the time of the<br>transfer or entry of the charging order that gave rise to the transfer.45-20-02. (802) Partnership continues after dissolution.Page No. 11.Subject to subsection 2, a partnership continues after dissolution only for the<br>purpose of winding up its business. The partnership is terminated when the winding<br>up of its business is completed.2.At any time after the dissolution of a partnership and before the winding up of its<br>business is completed, all of the partners, including any dissociating partner other<br>than a wrongfully dissociating partner, may waive the right to have the partnership's<br>business wound up and the partnership terminated. In that event:a.The partnership resumes carrying on its business as if dissolution had never<br>occurred, and any liability incurred by the partnership or a partner after the<br>dissolution and before the waiver is determined as if dissolution had never<br>occurred; andb.The rights of a third party accruing under subsection 1 of section 45-20-04 or<br>arising out of conduct in reliance on the dissolution before the third party knew<br>or received a notification of the waiver may not be adversely affected.45-20-03. (803) Right to wind up partnership business.1.After dissolution, a partner who has not wrongfully dissociated may participate in<br>winding up the partnership's business, but on application of any partner, partner's<br>legal representative, or transferee, the district court, for good cause shown, may<br>order judicial supervision of the winding up.2.The legal representative of the last surviving partner may wind up a partnership's<br>business.3.A person winding up a partnership's business may preserve the partnership<br>business or property as a going concern for a reasonable time, prosecute and<br>defend actions and proceedings, whether civil, criminal, or administrative, settle and<br>close the partnership's business, dispose of and transfer the partnership's property,<br>discharge the partnership's liabilities, distribute the assets of the partnership<br>pursuant to section 45-20-07, settle disputes by mediation or arbitration, and perform<br>other necessary acts.45-20-04. (804) Partner's power to bind partnership after dissolution. Subject tosection 45-20-05, a partnership is bound by a partner's act after dissolution which:1.Is appropriate for winding up the partnership business; or2.Would have bound the partnership under section 45-15-01 before dissolution, if the<br>other party to the transaction did not have notice of the dissolution.45-20-05. (805) Statement of dissolution.1.After dissolution, a partner who has not wrongfully dissociated may file a statement<br>of dissolution stating the name of the partnership and that the partnership has<br>dissolved and is winding up its business.2.A statement of dissolution cancels a filed statement of partnership authority for the<br>purposes of subsection 3 of section 45-15-03.3.For the purposes of sections 45-15-01 and 45-20-04, a person not a partner is<br>deemed to have notice of the dissolution and the limitation on the partners' authority<br>as a result of the statement of dissolution ninety days after it is filed.4.After filing and, if appropriate, recording a statement of dissolution, a dissolved<br>partnership may file and, if appropriate, record a statement of partnership authorityPage No. 2which will operate with respect to a person not a partner as provided in<br>subsections 3 and 4 of section 45-15-03 in any transaction, whether or not the<br>transaction is appropriate for winding up the partnership business.45-20-06. (806) Partner's liability to other partners after dissolution.1.Except as otherwise provided in subsection 2, after dissolution a partner is liable to<br>the other partners for the partner's share of any partnership liability incurred under<br>section 45-20-04.2.A partner who, with knowledge of the dissolution, incurs a partnership liability under<br>subsection 2 of section 45-20-04 by an act that is not appropriate for winding up the<br>partnership business is liable to the partnership for any damage caused to the<br>partnership arising from the liability.45-20-07. (807) Settlement of accounts and contributions among partners.1.In winding up a partnership's business, the assets of the partnership, including the<br>contributions of the partners required by this section, must be applied to discharge<br>its obligations to creditors, including, to the extent permitted by law, partners who are<br>creditors. Any surplus must be applied to pay in cash the net amount distributable to<br>partners in accordance with their right to distributions under subsection 2.2.Each partner is entitled to a settlement of all partnership accounts upon winding up<br>the partnership business. In settling accounts among the partners, the profits and<br>losses that result from the liquidation of the partnership assets must be credited and<br>charged to the partners' accounts. The partnership shall make a distribution to a<br>partner in an amount equal to any excess of the credits over the charges in the<br>partner's account. A partner shall contribute to the partnership an amount equal to<br>any excess of the charges over the credits in the partner's account.3.If a partner fails to contribute, all of the other partners shall contribute, in the<br>proportions in which those partners share partnership losses, the additional amount<br>necessary to satisfy the partnership obligations.A partner or partner's legalrepresentative may recover from the other partners any contributions the partner<br>makes to the extent the amount contributed exceeds that partner's share of the<br>partnership obligations.4.After the settlement of accounts, each partner shall contribute, in the proportion in<br>which the partner shares partnership losses, the amount necessary to satisfy<br>partnership obligations that were not known at the time of the settlement.5.The estate of a deceased partner is liable for the partner's obligation to contribute to<br>the partnership.6.An assignee for the benefit of creditors of a partnership or a partner, or a person<br>appointed by a court to represent creditors of a partnership or a partner, may<br>enforce a partner's obligation to contribute to the partnership.Page No. 3Document Outlinechapter 45-20 winding up partnership business