There can be life and death struggles playing out in a courtroom. One of those struggles could involve the fate of a limited partnership. Through a judicial dissolution, the partnership could be broken apart and ended, or a party not filing for dissolution would have the option of buying out the other parties and saving the limited partnership from destruction.
All this revolves around one section of California’s Commercial Code, §15908.02. Its provisions include a way for dissolution or a buy out amongst the partners and it states in part,
(a) On application by a partner, a court…may order dissolution of a limited partnership if it is not reasonably practicable to carry on the activities of the limited partnership in conformity with the partnership agreement.
(b) In any suit for judicial dissolution, the other partners may avoid the dissolution of the limited partnership by purchasing for cash the partnership interests owned by the partners so initiating the proceeding (the “moving parties”) at their fair market value…
(c) If the purchasing parties (1) elect to purchase the partnership interests owned by the moving parties, (2) are unable to agree with the moving parties upon the fair market value of the partnership interests, and (3) give bond with sufficient security to pay the estimated reasonable expenses…(the court) shall stay the winding up and dissolution proceeding and shall proceed to ascertain and fix the fair market value of the partnership interests owned by the moving parties.