(805 ILCS 206/701)
Sec. 701.
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 801 of this Act, the partnership
shall cause the
dissociated partner's interest in the partnership to be purchased for a buyout
price determined
pursuant to subsection (b) of this Section.
(b) The buyout price of a dissociated partner's interest is the amount that
would have been
distributable to the dissociating partner under Section 807(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
dissociated partner
and the partnership were wound up as of that date. Interest must be paid from
the date of
dissociation to the date of payment.
(c) Damages for wrongful dissociation under Section 602(b), and all other
amounts owing,
whether or not presently due, from the dissociated partner to the partnership,
must be offset
against the buyout price. Interest must 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 702.
(e) If no agreement for the purchase of a dissociated partner's interest is
reached within 120
days after a written demand for payment, the partnership shall pay, or cause to
be paid, in cash to
the dissociated partner the amount the partnership estimates to be the buyout
price and accrued
interest, reduced by any offsets and accrued interest under subsection (c).
(f) If a deferred payment is authorized under subsection (h), 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), 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) must be
accompanied by the
following:
(1) a 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) an explanation of how the estimated amount of the payment was calculated; and
(4) written notice that the payment is in full satisfaction of the obligation to |
(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 undue hardship to
the business of the partnership. A deferred payment must be adequately secured and bear
interest.
(i) A dissociated partner may maintain an action against the partnership, pursuant to Section
405(b)(2)(ii), to determine the buyout price of that partner's interest, any
offsets under subsection
(c), or other terms of the obligation to purchase. The action must be
commenced within 120 days
after the partnership has tendered 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 enter judgment for any additional payment or
refund. If
deferred payment is authorized under subsection (h), the court shall also
determine the security
for payment and other terms of the obligation to purchase. The court may
assess reasonable
attorney's 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).
(Source: P.A. 92-740, eff. 1-1-03.)
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