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jointly and severally guaranteed this loan. On May 29, 1987, the
partnership borrowed an additional $2,956,000 from the bank.3
The Partnership’s Bankruptcy Case
On June 30, 1988, the partnership initiated a bankruptcy
case by filing a voluntary chapter 11 bankruptcy petition in the
U.S. Bankruptcy Court for the District of Maryland (the
bankruptcy court). On November 13, 1989, the bankruptcy court
appointed a chapter 11 trustee (the trustee) to administer the
partnership’s assets and to develop an orderly liquidation and
sale of the assets.
Petitioner’s Contribution Agreement
The trustee negotiated with the partnership’s general
partners, including petitioner, to obtain some contribution from
them to pay the partnership’s debts. The trustee filed a
reorganization plan which, among other things, proposed a means
whereby general partners of the partnership could contribute to a
partnership release fund as a means of resolving the
partnership’s claims and other creditors’ claims against its
general partners. On November 27, 1990, the bankruptcy court
confirmed the plan.
Thereafter, the trustee reached a negotiated settlement with
some of the general partners, including petitioner, whereby in
exchange for paying agreed-upon sums to the partnership’s
bankruptcy estate, the contributing partners would be discharged
3 The Apr. 9, 1985, personal guaranty agreement also applied
to this loan.
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Last modified: May 25, 2011