Winding Up a Partnership

Title 2, Chapter 5, Article 8 of the Corporations Code deals with the winding up of partnership business under the California Uniform Partnership Act of 1994.

Section 16801 provides that a partnership is dissolved, and its business is wound up, only upon the occurrence of any of the five specified events.

Section 16802 says that a partnership continues after dissolution only for the purpose of winding up its business. The partnership is terminated when the winding up of its business is completed.

Section 16803 specifies that, after dissolution, a partner who has not dissociated may participate in winding up the partnership’s business, but on application of any partner, partner’s legal representative, or transferee, the court, for good cause shown, may order judicial supervision of the winding up.

Section 16804 states that a partnership is bound by a partner’s act after dissolution that is either of the two specified actions.

Section 16805 provides that, after dissolution, a partner who has not wrongfully dissociated may file a statement of dissolution stating the name of the partnership as filed with the Secretary of State and that the partnership has dissolved and is winding up its business.

Section 16806 states that, after dissolution, a partner is liable to the other partners for the partner’s share of any partnership liability incurred. Except for registered limited liability partnerships and foreign limited liability partnerships, a partner who, with knowledge of the dissolution, incurs a partnership liability by an act that is not appropriate for winding up the partnership business, is liable to the partnership for any damage caused to the partnership arising from the liability.

Section 16807 explains that, in winding up a partnership’s business, the assets of the partnership, including the contributions of the partners required by this section, shall be applied to discharge its obligations to creditors, including, to the extent permitted by law, partners who are creditors.