Iowa Code 486A.807 – Settlement of accounts and contributions among partners
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1. In winding up a partnership‘s business, the assets of the partnership, including the contributions of the partners required by this section, must be applied to discharge its obligations to creditors, including, to the extent permitted by law, partners who are creditors. Any surplus must be applied to pay in cash the net amount distributable to partners in accordance with their right to distributions under subsection 2.
Terms Used In Iowa Code 486A.807
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Business: includes every trade, occupation, and profession. See Iowa Code 486A.101
- Distribution: means a transfer of money or other property from a partnership to a partner in the partner's capacity as a partner or to the partner's transferee. See Iowa Code 486A.101
- 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: means an association of two or more persons to carry on as co-owners a business for profit formed under section 486A. See Iowa Code 486A.101
- 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: means as defined in section 4. See Iowa Code 486A.101
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
2. Each partner is entitled to a settlement of all partnership accounts upon winding up the partnership business. In settling accounts among the partners, profits and losses that result from the liquidation of the partnership assets must be credited and charged to the partners’ accounts. The partnership shall make a distribution to a partner in an amount equal to any excess of the credits over the charges in the partner’s account. A partner shall contribute to the partnership an amount equal to any excess of the charges over the credits in the partner’s account, but excluding from the calculation charges attributable to an obligation for which the partner is not personally liable under section 486A.306.
3. If a partner fails to contribute the full amount required under subsection 2, all of the other partners shall contribute, in the proportions in which those partners share partnership losses, the additional amount necessary to satisfy the partnership obligations for which they are personally liable under section 486A.306. A partner or partner’s legal representative may recover from the other partners any contributions the partner makes to the extent the amount contributed exceeds that partner’s share of the partnership obligations for which the partner is personally liable under section 486A.306.
4. After the settlement of accounts, each partner shall contribute, in the proportion in which the partner shares partnership losses, the amount necessary to satisfy partnership obligations that were not known at the time of the settlement and for which the partner is personally liable under section 486A.306.
5. The estate of a deceased partner is liable for the partner’s obligation to contribute to the partnership.
6. An assignee for the benefit of creditors of a partnership or a partner, or a person appointed by a court to represent creditors of a partnership or a partner, may enforce a partner’s obligation to contribute to the partnership.