Law School Discussion

Liquidation of Limited Company

Liquidation of Limited Company
« on: November 21, 2005, 07:57:04 AM »
I've got a question. I'm currently operating a partnership (with no documents or anything) and have sent off the relevant forms to the Registar to form a limited company.

If I am currently in the process of forming a company, and my partner (there's only two of us) buys a large amount of a product, what would be the legal position if, once being formed, my company collapses, and is liquidated?

I hope that made sense. This is for coursework by the way.

Thank you.

Re: Liquidation of Limited Company
« Reply #1 on: November 21, 2005, 11:56:30 AM »
I'm not touching this...

Who are you and why are you asking this question at this forum?
Don't you have an attorney?

Re: Liquidation of Limited Company
« Reply #2 on: November 21, 2005, 12:25:17 PM »
I'm not touching this...

Who are you and why are you asking this question at this forum?
Don't you have an attorney?

Quote
This is for coursework by the way.

Re: Liquidation of Limited Company
« Reply #3 on: November 21, 2005, 02:36:20 PM »
This looks like a question of legal advise from a lot of people that haven't passed a Bar, or that you don't know if they've passed a Bar.  Either way, are you sure you shouldn't make it clear you're asking a hypothetical question?

Re: Liquidation of Limited Company
« Reply #4 on: December 12, 2005, 07:44:21 AM »
It's not legal advice VJ, this is a hypo to which we're responding.

ecce

Re: Liquidation of Limited Company
« Reply #5 on: December 26, 2005, 05:30:39 AM »
You may insert some sort of provision stating that in the event of the dissolution and termination of the Partnership for any reason, the General Partner shall act as liquidator of the Partnership. The Liquidator winds up the affairs of the Partnership and sell or otherwise liquidate its investments. The Liquidator is usually vested with full right and unlimited discretion to determine the time, manner and terms of any sale or sales of Partnership Property pursuant to such liquidation, having due regard to the activity and condition of the relevant market and general financial and economic conditions. Following the payment of all debts/liabilities of the Partnership and all expenses of liquidation the proceeds of the liquidation shall be distributed to all Partners in accordance with the positive balances in their respective Capital Accounts. Any Partner with a deficit balance in his Capital Account shall contribute to the Partnership an amount equal to such deficit (but only to the extent of the amount of the positive Capital Accounts of the other Partners) and such contributions shall be distributed to those Partners with positive Capital Accounts at such time.

ecce

Re: Liquidation of Limited Company
« Reply #6 on: December 26, 2005, 05:41:49 AM »
The above applies if you're talking about an LP (Limited Partnership). If what you have in mind, on the other hand, is an LLP (Limited Liability Partnership), then you've to remember that LLPs are general partnerships with some limited liability protection in that each partner is responsible solely for his/her own negligence (and those working directly working under him/her), and not that of the other partners. In LPs, general partners have personal liability and are actively involved in the business, whereas limited partners contribute funds and are passively involved. If you and your partner are thinking to become actively involved in your venture the LP may not be the right choice for you. As for the LLP -- although they isolate you and your partners from each other's negligence, they don't shield your personal involvement in the venture.

In many states, owners of an LLP have only a reduced form of limited liability from the claims of the business's creditors. This "limited shield," as it is sometimes called, does not afford the owners the same protection they would enjoy in either the LLC or the corporation. In addition, in many states, the business interests of the owners of an LLP are afforded less protection from the claims of the owners' personal creditors, as compared to the LLC.

Re: Liquidation of Limited Company
« Reply #7 on: December 27, 2005, 02:23:28 AM »
Excellent advice, ecce!

Re: Liquidation of Limited Company
« Reply #8 on: February 17, 2006, 09:04:06 AM »
I didn't know that Limited Partnerships and Limited Liability Partnerships were different animals!

Re: Liquidation of Limited Company
« Reply #9 on: February 20, 2006, 08:50:51 PM »
They are, gabry!