Limited partnership linkage

1
Limited partnership linkage

• Statutes
• RULPA 403 and 1105
• RUPA No linkage
• UPA 6(2)
• ULPA 2001 Self-contained
• Common combinations
• RULPA/UPA
• RULPA/RUPA
• ULPA 2001

2
Henkels McCoy
Henkels Cedar Ridge Red Hawk G
A limited partners Chestnut Woods
Timber Knolls (aborted)
3
Wrongful distributions Henkels

• RULPA 608(b) return of contribution contra
• Act (607) or
• Agreement
• Red Hawk agreement
• 9(b) GPs power to establish reserves
• 12 Distributions subject to reserves
• Return of contribution depends on RH debts
• Wrongful return depends on reserves
• Liability to partnership per 608(b) but
  directly in Henkels for total of 371,000

4
Partners power Bodenvest

• Statute UPA 9 and RULPA 403
• Documents
• Promissory note (Larsen and Granada)
• Trust deed (Larsen for Granada)
• Hypothecation (Larsen for Granada for Bodenvest
  for loan to Bodenvest)
• Partnership agreement
• 15.2B Power to act in partnerships best
  interests
• 15.3 Restrictions on authority
• 15.21 Conclusive presumption loan used for
  authorized partnership purposes

5
Limited partner voting rights

• Fox
• 7.02majority amendment with exceptions, not
  including contribution cap
• What if amendment to
• Eliminate majority vote?
• Expand exceptions?
• Nantucket 11.13(A)(iv) amendment requires
• Unanimity (because adversely affects LP rights)?
• Majority (consent of the limited partners)?
• No vote at all (because refers to 4.3)?

6
The "control rule"

• ULPA 7 Gast
• RULPA 303 safe harbor reliance
• Why reliance?
• Relationship of control rule and . .
• Partnership by estoppel
• Veil-piercing

7
Baybank and linkage issues

• UPA 28/RUPA 504 -- RULPA 703
• UPA 32/RUPA 801(6) -- RULPA 802

Baybank (creditor)
Catamount (debtor)
Charging order
Connors (guarantors)
East Street (Connors are limited parters)
8
Firmani
house
Firmani
Limited partnership
Limited partnership interests
Firmani95 Family5
9
Gotham

• Partnership agreement
• 7.05 Transactions with GP if terms substantially
  equivalent to those from unaffiliated third party
• 7.10(a) Audit Committee resolution of conflicts.
  
• 9.01 GP can issue Units without LP approval but
  exchange requires approval by unaffiliated
  directors at price per formula.
• Moves by HGI
• Reverse split reduces number of outstanding
  units, produces odd lots. HGI 5.1?6.7
• Unit option plan sell post-reverse split units
  to GP officers and employees. HGI 6.7?11.4
• Odd lot tender offer by issuer for lt100 unit
  blocks. HGI 11.4?29.7 (33.4 to block
  removal).

10
Fiduciary duty contracts

• Alternatives to fiduciary duties
• Limits on discretion
• Monitoring and voting rights
• Power to remove general partner
• Reputational incentives
• Limited partner dissociation
• Costs of fiduciary duties
• Managers outside interests
• Access to information
• Need for discretion
• Litigation costs

11
Limited partnership dissolution causes

• RULPA UPA RUPA ULPA (2001)
• Agreement Agreement Agreement Agreement
• Consent Consent Consent Consent
• Decree Decree Decree Decree
• Dissociation Dissociation Dissociation Dissociatio
  n (if no vote to continue) Express
  will Express will
• Unlawfulness Unlawfulness
• Death Death
• Bankruptcy Bankruptcy