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 an individual, business corporation, nonprofit corporation, partnership, limited partnership, limited liability company, cooperative association, unincorporated nonprofit association, statutory trust, business trust, common-law business trust, estate, trust, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. See Tennessee Code 61-3-101
Property: means all property, whether real, personal, mixed, or tangible or intangible, or any right or interest in such property. See Tennessee Code 61-3-101
Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC
(1) The partnership would not be able to pay its debts as they become due in the ordinary course of the partnership’s activities and affairs; or(2) The partnership’s total assets would be less than the sum of its total liabilities, other than liabilities for which the recourse of creditors is limited to specified property, plus the amount that would be needed, if the partnership were to be dissolved and wound up at the time of the distribution, to satisfy the preferential rights upon dissolution and winding up of partners and transferees whose preferential rights are superior to the rights of persons receiving the distribution; provided, however, that the value of property that is subject to a liability for which the recourse of creditors is limited must be included in the total assets of the partnership, only to the extent the value of the property exceeds the liability.(b) A limited partnership may base a determination that a distribution is not prohibited under subsection (a) on:
(1) Financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances; or(2) A fair valuation or other method that is reasonable under the circumstances.(c) Except as otherwise provided in subsection (e), the effect of a distribution under subsection (a) is measured:
(1) In the case of a distribution that consists of a redemption or other purchase by the limited partnership of a transferrable interest, or of a transfer to a partner in return for relinquishment of any of that person‘s rights as a partner, as of the earlier of:
(A) The date money or other property is transferred or debt is incurred by the limited partnership; or(B) The date the person entitled to the distribution ceases to own the interest or right being acquired by the partnership in return for the distribution;(2) In the case of any other distribution of indebtedness, as of the date the indebtedness is distributed; and(3) In all other cases, as of the date:
(A) The distribution is authorized, if the payment occurs not later than one hundred twenty (120) days after that date; or(B) The payment is made, if the payment occurs more than one hundred twenty (120) days after the distribution is authorized.(d) A limited partnership’s indebtedness to a partner or transferee incurred by reason of a distribution made in accordance with this section is at parity with the partnership’s indebtedness to its general, unsecured creditors, except to the extent subordinated by agreement.(e) A limited partnership’s indebtedness, including indebtedness issued as a distribution, is not a liability for purposes of subsection (a) if the terms of the indebtedness provide that payment of principal and interest is made only if and to the extent that payment of a distribution could then be made under this section. If the indebtedness is issued as a distribution, each payment of principal or interest is treated as a distribution, the effect of which is measured on the date the payment is made.(f) In measuring the effect of a distribution under § 61-3-810, the liabilities of a dissolved limited partnership do not include any claim that has been disposed of under § 61-3-806, § 61-3-807, or § 61-3-808.
