(a)  Any distribution made by a partnership before its dissolution and winding up must be in equal shares among partners, except to the extent necessary to comply with a transfer effective under § 7-12.1-503 or charging order in effect under § 7-12.1-504.

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Terms Used In Rhode Island General Laws 7-12.1-405

  • Distribution: means a transfer of money or other property from a partnership to a person on account of a transferable interest or in a person's capacity as a partner. See Rhode Island General Laws 7-12.1-102
  • 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 person that:

    (i)  Has become a partner in a partnership under Rhode Island General Laws 7-12.1-102

  • 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.
  • Person: means an individual, business corporation, nonprofit corporation, partnership, limited partnership, limited liability company, general cooperative association, limited cooperative association, unincorporated nonprofit association, statutory trust, business trust, common-law business trust, estate, trust, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. See Rhode Island General Laws 7-12.1-102
  • Transfer: includes :

    (i)  An assignment;

    (ii)  A conveyance;

    (iii)  A sale;

    (iv)  A lease;

    (v)  An encumbrance, including a mortgage or security interest;

    (vi)  A gift; and

    (vii)  A transfer by operation of law. See Rhode Island General Laws 7-12.1-102

  • Transferee: means a person to which all or part of a transferable interest has been transferred, whether or not the transferor is a partner. See Rhode Island General Laws 7-12.1-102

(b)  Subject to § 7-12.1-701, a person has a right to a distribution before the dissolution and winding up of a partnership only if the partnership decides to make an interim distribution.

(c)  A person does not have a right to demand or receive a distribution from a partnership in any form other than money. Except as otherwise provided in § 7-12.1-806, a partnership may distribute an asset in kind only if each part of the asset is fungible with each other part and each person receives a percentage of the asset equal in value to the person’s share of distributions.

(d)  If a partner or transferee becomes entitled to receive a distribution, the partner or transferee has the status of, and is entitled to all remedies available to, a creditor of the partnership with respect to the distribution. However, the partnership’s obligation to make a distribution is subject to offset for any amount owed to the partnership by the partner or a person dissociated as partner on whose account the distribution is made.

History of Section.
P.L. 2022, ch. 123, § 2, effective January 1, 2023; P.L. 2022, ch. 124, § 2, effective January 1, 2023.