Corporate Law Do equal partners share equal liability

[Yokes]

There are three equal individual partners (A, B, and C own 5% each) and one LLC (85%) in this partnership. Two of the individual partners (A & B) also own approx. 80% of the LLC.
A & B have signed personal guarantees separately and together on some of the partnership's debt. The business is in trouble. Partner C - who has not signed any of the personal guarantees - has many debt-free personal assets while the others do not.
Is Partner C equally liable for the partnership's debts even if he/she did not sign any personal guarantees?

 

[dee_dub]

Is Partner C equally liable for the partnership's debts even if he/she did not sign any personal guarantees?

I don't know the specific law in Minnesota, but under general principles, yes. It is the nature of the beast that partners are liable for the debts of the partnership, whether or not they have given personal guarantees. Whether it is equal liability depends on the circumstances, but liabilty amongst partners is usually joint or joint and several.

Who owns the other 20% of the LLC?

 

[Yokes]

The other 20% is split among 4 others with none owning more than 6% and they are not involved in the business.

I guess my question really is, could the personal assets of partner C be vulnerable? It is my understanding that only "partnership" assets would normally be subject to sale/compensation to satisfy the debts, but in the case where individuals (A, B) signed personal guarantees their assets would also be scrutinized. Since "C" did not follow suit, his/her personal assets would be secure.

 

[dee_dub]

A&B signed personal guarantees with respect to specific credit instruments. However, the partnerships general indebtedness, of which those instruments are a part, also belongs to each partner personally. So the lender's first recourese is against the partnership (which borrowed the money), then against A&B as personal guarantors, but ultimately also against C as a partner liable for the general debt.

C *does* have recourse against the other partners for their 80% pro rata share of the debt. For whatever that's worth.