HB1937

Report Title:

Limited Partnerships; Corporation as General Partner; Withdrawal

 

Description:

Amends the Limited Partnership Act to provide that a corporation ceases to be a general partner of a limited partnership when the circuit court decrees that the corporation has performed various acts that prejudicially affect the carrying on of the business or render it reasonably impracticable to carry on business.

 

HOUSE OF REPRESENTATIVES	H.B. NO.	1937
TWENTY-FIRST LEGISLATURE, 2002
STATE OF HAWAII

A BILL FOR AN ACT

 

relating to the uniform limited partnership act.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Section 425D-402, Hawaii Revised Statutes, is amended to read as follows:

"[[]§425D-402[]] Events of withdrawal. Except as approved by the specific written consent of all partners at the time, a person ceases to be a general partner of a limited partnership upon the happening of any of the following events:

(1) The general partner withdraws from the limited partnership as provided in section 425D-602;

(2) The general partner ceases to be a member of the limited partnership as provided in section 425D-702;

(3) The general partner is removed as a general partner in accordance with the partnership agreement;

(4) Unless otherwise provided in writing in the partnership agreement, the general partner:

(A) Makes an assignment for the benefit of creditors;

(B) Files a voluntary petition in bankruptcy;

(C) Is adjudicated bankrupt or insolvent;

(D) Files a petition or answer seeking for that general partner any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any law or rule;

(E) Files an answer or pleading admitting or failing to contest the material allegations of a petition filed against that general partner in any proceeding of this nature; or

(F) Seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of the general partner or of all or any substantial part of that general partner's properties;

(5) Unless otherwise provided in writing in the partnership agreement, one hundred twenty days after the commencement of any proceeding against the general partner seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any law or rule, the proceeding has not been dismissed, or if within ninety days after the appointment without that general partner's consent or acquiescence of a trustee, receiver, or liquidator of the general partner or of all or any substantial part of that general partner's properties, the appointment is not vacated or stayed or within ninety days after the expiration of any such stay, the appointment is not vacated;

(6) In the case of a general partner who is a natural person:

(A) That general partner's death; or

(B) The entry of an order by a court of competent jurisdiction adjudicating the general partner incompetent to manage that general partner's person or estate;

(7) In the case of a general partner who is acting as general partner by virtue of being a trustee of a trust, the termination of the trust, but not merely the substitution of a new trustee;

(8) In the case of a general partner that is a separate partnership, the dissolution and commencement of winding up of the separate partnership;

(9) In the case of a general partner that is a corporation[, the]:

(A) The filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter; [or]

(B) The circuit court of the circuit in which the principal place of business of the limited partnership is located finds that the corporation, by or through its board of directors:

(i) Has performed any act or omission that involves intentional or knowing misconduct or violation of the law, which constitutes a breach of fiduciary duty to the limited partners, or has been guilty of such other conduct as tends to affect prejudicially the carrying on of the business;

(ii) Wilfully or persistently commits a breach of the partnership agreement, or otherwise so conducts itself in matters relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with the corporation; or

(iii) Has filed an answer or pleading admitting or failing to contest the material allegations of a petition, or has failed to file an answer or pleading, that has been filed against the corporation or the general partner, or both, alleging knowing or wilful misconduct or wrongdoing by the corporation or general partner, or both, in any proceeding seeking a reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any law or rule; or

(C) Unless otherwise provided in writing in the partnership agreement, one hundred twenty days after the commencement of any proceeding against the corporation or the general partner, or both, alleging knowing or wilful misconduct or wrongdoing by the corporation or general partner, or both, seeking dissolution, reorganization, receivership, a business master, or similar relief under any law or rule, the proceeding has not been dismissed; or

(10) In the case of an estate, the distribution by the legal representative of the estate of the estate's entire interest in the limited partnership."

SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 3. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________