(a) If a person is dissociated as a partner from a partnership without resulting in a dissolution and winding up of the partnership business or not for profit activity under Section 10A-8A-8.01, the partnership shall cause that person’s transferable interest in the partnership owned by that person at the time of dissociation to be purchased for a buyout price determined pursuant to subsection (b).
Terms Used In Alabama Code 10A-8A-7.01
Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
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.
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: includes a corporation as well as a natural person. See Alabama Code 1-1-1
state: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Alabama Code 1-1-1
year: means a calendar year; but, whenever the word "year" is used in reference to any appropriations for the payment of money out of the treasury, it shall mean fiscal year. See Alabama Code 1-1-1
(b) The buyout price of the transferable interest owned by the person at the time of dissociation as a partner is an amount equal to the fair value of that person’s transferable interest as of the date of dissociation. Interest on the buyout price must be paid from the date of dissociation to the date of payment.(c)Damages for wrongful dissociation under Section 10A-8A-6.02(b) and (c), and all other amounts owing, whether or not presently due, from the person dissociated as a partner to the partnership, must be offset against the buyout price. Interest on damages for wrongful dissociation must be paid from the date of the wrongful dissociation to the date of payment. Interest on all other amounts, whether or not presently due, must be paid from the date the amount owed becomes due to the date of payment.(d) A partnership shall indemnify a person dissociated as a partner whose transferable interest is being purchased against all partnership liabilities, whether incurred before or after the dissociation, except liabilities incurred by an act of the person dissociated as a partner under Section 10A-8A-7.02.(e) If no agreement for the purchase of the transferable interests of a person dissociated as a partner is reached within 120 days after a written demand for payment, the partnership shall pay, or cause to be paid, in cash to the person dissociated as a 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 written 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) a written explanation of how the estimated amount of the payment was calculated; and(4) written notice which shall state that the payment is in full satisfaction of the obligation to purchase unless, within 120 days after the written notice, the person dissociated as a partner commences an action to determine the buyout price of that person’s transferable interest, any offsets under subsection (c), or other terms of the obligation to purchase.(h) A person that wrongfully dissociates as a partner 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 person establishes to the satisfaction of the court that earlier payment will not cause undue hardship to the business or not for profit activity of the partnership. A deferred payment under this subsection must bear interest and, to the extent it would not cause undue hardship to the business or not for profit activity of the partnership, be adequately secured.(i) A person dissociated as a partner may maintain an action against the partnership, pursuant to Section 10A-8A-4.13(b)(2)(ii), to determine the buyout price of that person’s transferable interest under subsection (b), 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 that person’s transferable interest under subsection (b), any offset due under subsection (c), 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, if any, 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).
