Arizona Laws 29-1061. Purchase of dissociated partner’s interest
A. If a partner is dissociated from a partnership without resulting in a dissolution and winding up of the partnership business under section 29-1071, the partnership shall cause the dissociated partner’s interest, if any, in the partnership to be purchased for a buyout price determined pursuant to subsection B of this section.
Terms Used In Arizona Laws 29-1061
- Action: includes any matter or proceeding in a court, civil or criminal. See Arizona Laws 1-215
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Business: includes every trade, occupation and profession. See Arizona Laws 29-1001
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Partner: means a general partner and, for purposes of article 9 of this chapter, both a general partner and a limited partner. See Arizona Laws 29-1001
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Partnership: means an association or entity formed under section 29-1012, a predecessor law or a comparable law of another jurisdiction. See Arizona Laws 29-1001
- Statement: means a statement of partnership authority under section 29-1023, a statement of denial under section 29-1024, a statement of dissociation under section 29-1064, a statement of dissolution under section 29-1075, a statement of merger under section 29-2205, a statement of qualification as a limited liability partnership under section 29-1101, a statement of foreign qualification under section 29-1106 or an amendment or cancellation of any of the foregoing. See Arizona Laws 29-1001
B. The buyout price of a dissociated partner’s interest is the amount that would have been distributable to the dissociating partner under section 29-1077, subsection B if, on the date of dissociation, the assets of the partnership were sold at a price equal to the greater of the liquidation value or the value based on a sale of the entire business as a going concern without the continuing services of any of the partners and the partnership were wound up as of that date. Interest shall be paid from the date of dissociation to the date of payment.
C. Damages for wrongful dissociation under section 29-1052, subsection B, and all other amounts owing, whether or not presently due, from the dissociated partner to the partnership, shall be offset against the buyout price. Interest shall be paid from the date the amount owed becomes due to the date of payment.
D. A partnership shall indemnify a dissociated partner whose interest is being purchased against all partnership liabilities, whether incurred before or after the dissociation, except liabilities incurred by an act of the dissociated partner under section 29-1062.
E. If no agreement for the purchase of a dissociated partner’s interest is reached within one hundred twenty days after a written demand for payment, the partnership shall pay, or cause to be paid, in cash to the dissociated partner the amount, if any, the partnership estimates to be the buyout price and accrued interest, reduced by any offsets and accrued interest under subsection C of this section.
F. If a deferred payment is authorized under subsection H of this section, the partnership may tender a written offer to pay the amount it estimates to be the buyout price and accrued interest, reduced by any offsets under subsection C of this section, stating the time of payment, the amount and type of security for payment and the other terms and conditions of the obligation.
G. The payment or tender required by subsection E or F of this section shall be accompanied by the following:
1. A written statement of partnership assets and liabilities as of the date of dissociation.
2. The latest available partnership balance sheet and income statement, if any.
3. A written explanation of how the estimated amount of the payment was calculated.
4. Written notice that the payment is in full satisfaction of the obligation to purchase unless, within one hundred twenty days after the written notice, the dissociated partner commences an action to determine the buyout price, any offsets under subsection C of this section or other terms of the obligation to purchase.
H. A partner who wrongfully dissociates before the expiration of a definite term or the completion of a particular undertaking is not entitled to payment of any portion of the buyout price until the expiration of the term or completion of the undertaking, unless the partner establishes to the satisfaction of the court that earlier payment will not cause material hardship to the business of the partnership. A deferred payment shall bear interest and shall be adequately secured by partnership assets if and to the extent reasonably practicable.
I. A dissociated partner may maintain an action against the partnership, pursuant to section 29-1035, subsection B, paragraph 2, subdivision (b), to determine the buyout price of that partner’s interest, any offsets under subsection C of this section or other terms of the obligation to purchase. The action shall be commenced within one hundred twenty days after the partnership tenders payment or an offer to pay or within one year after written demand for payment if no payment or offer to pay is tendered. The court shall determine the buyout price of the dissociated partner’s interest, any offset due under subsection C of this section and accrued interest and shall enter judgment for any additional payment or refund. If deferred payment is authorized under subsection H of this section, the court shall also determine the security for payment and other terms of the obligation to purchase. The court may assess reasonable attorney fees and the fees and expenses of appraisers or other experts for a party to the action, in amounts the court finds equitable, against a party that the court finds acted arbitrarily, vexatiously or not in good faith. The finding may be based on the partnership’s failure to tender payment or an offer to pay or to comply with subsection G of this section.