50-73.112 - Purchase of dissociated partner's interest. - Virginia Statutes

§ 50-73.112. Purchase of dissociated partner's interest.

A. If a partner is dissociated from a partnership without resulting in adissolution and winding up of the partnership business under § 50-73.117, thepartnership shall cause the dissociated partner's interest in the partnershipto be purchased for a buyout price determined pursuant to subsection B.

B. The buyout price of a dissociated partner's interest is the amount thatwould have been distributable to the dissociating partner under subsection Bof § 50-73.123 if, on the date of dissociation, the assets of the partnershipwere sold at a price equal to the greater of the liquidation value or thevalue based on a sale of the entire business as a going concern without thedissociated partner 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 subsection B of § 50-73.110, andall other amounts owing, whether or not presently due, from the dissociatedpartner to the partnership, shall be offset against the buyout price.Interest shall be paid from the date the amount owed becomes due to the dateof payment.

D. A partnership shall indemnify a dissociated partner whose interest isbeing purchased against all partnership liabilities, whether incurred beforeor after the dissociation, except liabilities incurred by an act of thedissociated partner under § 50-73.113.

E. If no agreement for the purchase of a dissociated partner's interest isreached within 120 days after a written demand for payment, the partnershipshall pay, or cause to be paid, in cash to the dissociated partner the amountthe 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 partnershipmay tender a written offer to pay the amount it estimates to be the buyoutprice and accrued interest, reduced by any offsets under subsection C,stating the time of payment, the amount and type of security for payment, andthe other terms and conditions of the obligation.

G. The payment or tender required by subsection E or subsection F shall beaccompanied by the following:

1. A statement of partnership assets and liabilities as of the date ofdissociation;

2. The latest available partnership balance sheet and income statement, ifany;

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 obligationto purchase unless, within 120 days after the written notice, the dissociatedpartner commences an action to determine the buyout price, any offsets undersubsection C, or other terms of the obligation to purchase.

H. A partner who wrongfully dissociates before the expiration of a definiteterm or the completion of a particular undertaking is not entitled to paymentof any portion of the buyout price until the expiration of the term orcompletion of the undertaking, unless the partner establishes to thesatisfaction of the court that earlier payment will not cause undue hardshipto the business of the partnership. A deferred payment shall bear interestand, to the extent it would not cause undue hardship to the partnership, beadequately secured.

I. A dissociated partner may maintain an action against the partnership,pursuant to subdivision B 2 a of § 50-73.103, to determine the buyout priceof that partner's interest, any offsets under subsection C, or other terms ofthe obligation to purchase. The action shall be commenced within 120 daysafter the partnership has tendered payment or an offer to pay or within oneyear after written demand for payment if no payment or offer to pay istendered. The court shall determine the buyout price of the dissociatedpartner's interest, any offset due under subsection C, and accrued interest,and enter judgment for any additional payment or refund. If deferred paymentis authorized under subsection H, the court shall also determine the securityfor payment and other terms of the obligation to purchase. The court mayassess reasonable attorney's fees and the fees and expenses of appraisers orother experts for a party to the action, in amounts the court findsequitable, against a party that the court finds acted arbitrarily,vexatiously, or not in good faith. The finding may be based on thepartnership's failure to tender payment or an offer to pay or to comply withsubsection G.

(1996, c. 292.)