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Partner leaving Ltd Partnership, will not abide by the Buy/Sell Agreement

Discussion in 'Business & Corporate Matters' started by Sven Quanrude, Jun 13, 2019 at 4:01 PM.

  1. Sven Quanrude

    Sven Quanrude Law Topic Starter New Member

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    Jurisdiction:
    Kansas
    well, we're at our wits ends. a partner (we have 7 in total) wants to exit the limited partnership. We have a very clear and concise buy/sell agreement that all members had signed. Our Ltd Partnership is registered with the state of kansas

    We've made him an offer, which was refused. The next step was that each party had 45 days hire their own certified valuation appraiser to determine the exiting partners financial share in the partnership. The 45 days are up, we (the Partnership) provided this professionally done valuation, the exiting member did not provide any valuation.

    Provisions in the Ltd partner say " after 45 days, both parties will present valuations - if their still is no resolution or agreement, a 3rd party valuator, approved by both parties will review both valuation and come up with a binding settlement"

    Since the exiting partner didn't even come up with a valuation in those 45 days (he says that his original offer is the "valuation") but we did, what is our next step?

    I would think that this non activiity from the exiting partner would be cause for a summary judgement in favor of the limited partnership, since he clearly hasn't followed the buy/sell agreement. What say you?
     
  2. PayrollHRGuy

    PayrollHRGuy New Member

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    You are at this point.
     
  3. zddoodah

    zddoodah Well-Known Member

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    General partner or limited partner?

    Just to clarify, is this a limited partnership or an LLC? I ask because the term "member" is typically used in connection with LLCs but not limited partnerships.

    One would need to read the partnership agreement and be familiar with Kansas limited partnership law to answer this question intelligently.

    Summary judgment is a type of motion in civil litigation, so I'm wondering why you're using that term despite not having otherwise made any reference to any litigation.
     
  4. Sven Quanrude

    Sven Quanrude Law Topic Starter New Member

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    Correction, folks! Yes, we're a LLC. I had limited partnership on my mind because of another business venture that I'm in. Sorry bout that

    I hope to clarify this. We made exiting member an offer. He refused it and counteroffered...we refused that. According to our buy/sell agreement, if the parties involved can't negotiate a ettlement, then each side needs to procur the services of a certified business valuator to come up with the equity of our exiting member. Both parties hire their own valuator. After all parties are notified, each has 45 days to present the findings of their valuator.

    The 45 days are up. We've presented our case, the exiting member never hired a certified valuator and states that his original offer "is" the valuation for his side.

    If, there is no agreement, a 3rd party evaluator, approved by both parties, is brought to review the valuations from both parties and the 3rd party decisision is final

    So, yes, guess we're at this point. The 3rd party will receive a report put together by a certified business evaluator (from the LLC) and just a $ lump sum number (from the exiting member).

    I would think the report from a certified evaluator will hold more weight than a # pulled out of someone butt.

    If the exiting party fails to accept the 3rd parties decision, then it goes to court and loser pays all attorney fees. If it got to this point, I'd think that a summary judgement would be issued (no reason to hash everything over in the court room)
     
  5. adjusterjack

    adjusterjack Super Moderator

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    Sure there is. Your departing member wants more money and figures that the potential cost of litigation (for which you front the lawyer fees) will convince you to up the ante.

    Maybe if you just go ahead and sue him it would force him to consider what his recalcitrance will cost him should you win.
     

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