Winding Up Partnership Business

A.R.S. tit. 29, ch. 5, art. 8

in effect

A.R.S. § 29-1071 Events causing dissolution and winding up of partnership business

29-1071. Events causing dissolution and winding up of partnership business A partnership is dissolved, and its business shall be wound up, only on the occurrence of any of the following events: 1. In a partnership at will, the partnership having notice from a partner, other than a partner who is dissociated under section 29-1051, paragraphs 2 through 10, of that partner's express will to withdraw as a partner, or on a later date specified by the partner. 2. In a partnership for a definite term or particular undertaking either: (a) Within ninety days after a partner's dissociation by death or otherwise under section 29-1051, paragraphs 6 through 10 or wrongful dissociation under section 29-1052, subsection B, the express will of at least half of the remaining partners to wind up the partnership business. A partner's rightful dissociation pursuant to section 29-1052, subsection B, paragraph 2, subdivision (a) constitutes the expression of that partner's will to wind up the partnership business. (b) The express will of all of the partners to wind up the partnership business. (c) After the expiration of the term, at the election of any partner by written notice to the partnership, or on the completion of the undertaking. 3. An event agreed to in the partnership agreement resulting in the winding up of the partnership business. 4. An event that makes it unlawful for all or substantially all of the business of the partnership to be continued, but a cure of illegality within ninety days after notice to the partnership of the event is effective retroactively to the date of the event for purposes of this section. 5. On application by a partner, a judicial determination that either: (a) The economic purpose of the partnership is likely to be unreasonably frustrated. (b) Another partner has engaged in conduct relating to the partnership business that makes it not reasonably practicable to carry on the business in partnership with that partner. (c) It is not otherwise reasonably practicable to carry on the partnership business in conformity with the partnership agreement. 6. On application by a transferee of a partner's transferable interest, a judicial determination that it is equitable to wind up the partnership business either: (a) After the expiration of the term or completion of the undertaking, if the partnership was for a definite term or particular undertaking at the time of the transfer or entry of the charging order that gave rise to the transfer. (b) At any time, if the partnership was a partnership at will at the time of the transfer or entry of the charging order that gave rise to the transfer. 7. The expiration of ninety days after a partner's dissociation that results in one or no remaining partner, unless the dissociation was pursuant to section 29-1051, paragraph 6 or 7 and before the expiration, all of the transferees, including transferees of the dissociated partner, and the remaining partner, if any, agree by written consent to continue the business of the partnership and admit that number of partners sufficient to cause the partnership to have at least two partners.

A.R.S. § 29-1072 Partnership continues after dissolution

29-1072. Partnership continues after dissolution A. Subject to subsection B of this section, 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. If the partnership is a limited liability partnership, its status as a limited liability partnership continues until termination. B. At any time after the dissolution of a partnership and before the winding up of its business is completed, all of the partners, including any dissociating partner other than a wrongfully dissociating partner, may waive the right to have the partnership's business wound up and the partnership terminated. In that event both: 1. The partnership resumes carrying on its business as if dissolution had never occurred, and any liability incurred by the partnership or a partner after the dissolution and before the waiver is determined as if dissolution had never occurred. 2. The rights of a third party accruing under section 29-1074, paragraph 1 or arising out of conduct in reliance on the dissolution before the third party knew or received a notification of the waiver are not adversely affected.

A.R.S. § 29-1073 Right to wind up partnership business

29-1073. Right to wind up partnership business A. After dissolution, a partner who has not wrongfully dissociated may participate in winding up the partnership's business, but on application of any partner, partner's legal representative or transferee, the superior court, for good cause shown, may order judicial supervision of the winding up. B. The legal representative of the last surviving partner may wind up a partnership's business. C. A person winding up a partnership's business may preserve the partnership business or property as a going concern for a reasonable time, prosecute and defend actions and proceedings, whether civil, criminal or administrative, settle and close the partnership's business, dispose of and transfer the partnership's property, discharge the partnership's liabilities, distribute the assets of the partnership pursuant to section 29-1077, settle disputes by mediation, arbitration or otherwise and perform other necessary acts.

A.R.S. § 29-1074 Partner's power to bind partnership after dissolution

29-1074. Partner's power to bind partnership after dissolution Subject to section 29-1075, a partnership is bound by a partner's act after dissolution that either: 1. Is appropriate for winding up the partnership business. 2. Would have bound the partnership under section 29-1021 before dissolution, if the other party to the transaction did not have notice of the dissolution.

A.R.S. § 29-1075 Statement of dissolution

29-1075. Statement of dissolution A. After dissolution, a partner who has not wrongfully dissociated may file a statement of dissolution stating the name of the partnership and that the partnership has dissolved and is winding up its business. B. A statement of dissolution cancels a filed statement of partnership authority for the purposes of section 29-1023, subsection D and is a limitation on authority for the purposes of section 29-1023, subsection E. C. For the purposes of sections 29-1021 and 29-1074, a person who is not a partner is deemed to have notice of the dissolution and the limitation on the partners' authority as a result of the statement of dissolution ninety days after it is filed. D. After filing and, if appropriate, recording a statement of dissolution, a dissolved partnership may file and, if appropriate, record a statement of partnership authority that operates with respect to a person who is not a partner as provided in section 29-1023, subsections D and E in any transaction, whether or not the transaction is appropriate for winding up the partnership business. E. In order for a partnership to file a statement of dissolution where that partnership has not previously filed a statement of partnership authority with the secretary of state, the partnership must first file a statement of partnership authority with the secretary of state pursuant to section 29-1023. The secretary of state shall not accept any statement of dissolution for which a statement of partnership authority has not first been filed with the secretary of state.

A.R.S. § 29-1076 Partner's liability to other partners after dissolution

29-1076. Partner's liability to other partners after dissolution A. Except as otherwise provided in subsection B of this section or in section 29-1026, after dissolution a partner is liable to the other partners for the partner's share of any partnership liability incurred under section 29-1074. B. A partner who, with knowledge of the dissolution, incurs a partnership liability under section 29-1074, paragraph 2 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.

A.R.S. § 29-1077 Settlement of accounts and contributions among partners

29-1077. Settlement of accounts and contributions among partners A. 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. Any surplus shall be applied to pay in cash the net amount distributable to partners in accordance with their right to distributions under subsection B of this section. B. Each partner is entitled to a settlement of all partnership accounts on winding up the partnership business. In settling accounts among the partners, the profits and losses during the period of winding up, including those profits and losses that result from the liquidation of the partnership assets, shall 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 except that in determining such excess, charges attributable to obligations for which the partner is personally liable under section 29-1026 shall not be considered. Damages for wrongful dissociation under section 29-1052, subsection B and all other amounts owing, whether or not presently due, from the partner to the partnership shall be offset against the amounts distributable to the partner and shall increase the amount that must be contributed by the partner pursuant to this section. C. If a partner fails to contribute the full amount required under subsection B of this section, each of the other partners shall contribute, in the proportion in which the partner shares partnership losses, the additional amount necessary to satisfy any partnership obligations. A partner or partner's legal representative may recover from the other partners any contributions that the partner or legal representative makes to the extent the amount contributed exceeds that partner's share of the partnership obligations for which the partner is liable under section 29-1026. D. 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 or the amounts of obligations that were not known at the time of the settlement. E. The estate of a deceased partner is liable for the partner's obligation to contribute to the partnership. F. 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. G. A person who was a partner at any time within ninety days before the commencement of winding up is a partner for the purposes of this section.

Source: Arizona State Legislature (azleg.gov)URL: https://www.azleg.gov/arsDetail/?title=29Fetched: 10/31/2026