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Petitioner contends that under the terms of the partnership
agreement the interests of these partners have been terminated.
Petitioner also contends that under the partnership agreement the
partners are to be treated as having never assumed these
obligations, and, therefore, they should not be allocated any
share of the partnership liabilities under the agreement.
Petitioner's contentions are not supported by the evidence
in the record. Petitioner has not produced any evidence that any
partners defaulted on the notes.
Even if we were to find that the partners defaulted on the
notes, the partnership agreement for Poison Creek Ranches #1 does
not support petitioner's argument. The partnership agreement
does not provide for the adjustment or reallocation of
partnership items to the limited partners. In addition, the
partnership agreement provides that a limited partner may be
expelled for defaulting on his or her subscribed contribution,
not for defaulting on partnership obligations. Nor does the
partnership agreement provide that an expulsion is retroactive to
the beginning of the partnership.
Moreover, the settlement agreement expressly provides for
the inclusion of partners who later default on their note
obligations to Ranches (inactive partners) in the original
allocations of the partnership debt. The agreement is binding on
the parties. Sec. 6224.
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