Dissolving a Partnership
While practicing law in northeast Florida, Wood, Atter & Wolf is often contacted for business advice regarding forming, operating and dissolving corporate entities, partnerships and limited partnerships by businesses operating outside of Florida – from just across the Florida border or, due to the reach of the internet, by businesses located many states away. Matters involving the creation or dissolution of businesses “created” within another state are often referred to attorneys located in the business’ home state. Why is this? It is because a business entity is considered a “creature” of the state in which it is created–with its governance, creation, operational restrictions and dissolution established and governed by the rules of that state. A Florida Corporation operates under the rules established by the Florida legislature. Further, as the establishment of partnerships is an area fully given to the states, each state and the District of Columbia has its own statutes and common law principles that govern partnerships, both their establishment and dissolution.
The formation and operation of Florida partnerships is governed by Chapter 620, Florida Statutes. The Florida Revised Uniformed Limited Partnership Act was enacted in 1986. In 1995, the Florida Legislature completely rewrote Florida partnership law and repealed numerous sections of the Uniform Partnership Act. The Florida Legislature also adopted the Revised Uniform Partnership Act, as well as authorized limited liability partnerships. As of January 1, 1998, the Revised Uniform Partnership Act governs all Florida Partnerships.
Dissolution under the Revised Uniform Partnership Act: Pursuant to the Revised Uniform Partnership Act, a partnership is dissolved and its business must be "wound up" upon the occurrence of certain events:
1. Withdrawal of a partner other than a dissociated partner;
2. Express will of all the partners;
3. The occurrence of a specified event or expiration of the term or completion of the particular undertaking set forth in the partnership agreement;
4. Expiration of 90 days after a partner's dissociation by death, wrongful dissociation or as otherwise set forth under applicable Florida Statutes (unless the majority of the remaining partners, including rightfully dissociated partners, agree to continue the partnership business);
5. The occurrence of an event making it unlawful to continue the partnership, unless the illegality is cured within 90 days after notice to the partnership and the cure is effective retroactive to the date of the event; or
6. A judicial determination that the economic purpose of the partnership is frustrated, it is not reasonably practical to carry on the business of the partnership or that it is equitable to wind up the partnership business.
Contacting a Business Attorney is critical if considering dissolving a partnership, as the attorney can assist with necessary documentation and assist with thinking through the issues that may arise as a result of the termination. You will need to consider and address the options available to the individual partners. For example, your business may be operating under an individual partner’s name (Jon Smythe’s Realty Group) and, upon leaving the Partnership, Mr. Jon Smythe may wish to ensure that no business continues to operate under that same name after the Partnership is dissolved. If you anticipate a possible name change for your business, certain paperwork may need to be filed to address the Partnership’s fictitious name filings. Consideration should be given to securing an accounting of the assets and liabilities of the partnership and determining how those assets and liabilities will be allocated between the partners upon dissolution. If one partner is being bought out by other partners, a contract should be drafted specifying what is being purchased and identifying any releases of liability. If you are considering dissolving a partnership contact Wood, Atter & Wolf, P.A., to consult with an experienced Business Attorney and see our website for additional information on business entities.
