Colorado § 7-61-117 - Withdrawal or reduction of limited partner's contribution.

§ 7-61-117. Withdrawal or reduction of limited partner's contribution.

(1) A limited partner shall not receive from a general partner or out of partnership property any part of the limited partner's contributions until:

(a) All liabilities of the partnership, except liabilities to general partners and to limited partners on account of their contributions, have been paid or there remains property of the partnership sufficient to pay them;

(b) The consent of all members is had, unless the return of the contribution may be rightfully demanded under the provisions of subsection (2) of this section; and

(c) The certificate is canceled or so amended as to state the withdrawal or reduction.

(2) Subject to the provisions of subsection (1) of this section, a limited partner may rightfully demand the return of the limited partner's contribution:

(a) On the dissolution of a partnership;

(b) When the date stated in the certificate for its return has arrived; or

(c) After the limited partner has given six months' notice in writing to all other members if no time is stated in the certificate either for the return of the contribution or for the dissolution of the partnership.

(3) In the absence of any statement in the certificate to the contrary or the consent of all members, a limited partner, irrespective of the nature of the limited partner's contribution, has only the right to demand and receive cash in return for such contribution.

(4) A limited partner may have the partnership dissolved and its affairs wound up when:

(a) The limited partner rightfully but unsuccessfully demands the return of the limited partner's contribution; or

(b) The other liabilities of the partnership have not been paid or the partnership property is insufficient for their payment as required by subsection (1)(a) of this section and the limited partner would otherwise be entitled to the return of the limited partner's contribution.

Source: L. 31: p. 633, § 16. CSA: C. 123, § 59. CRS 53: § 104-2-16. C.R.S. 1963: § 104-2-16. L. 2003: (1)(c), (2)(b), and (2)(c) amended, p. 2240, § 119, effective July 1, 2004. L. 2004: IP(1), IP(2), (2)(c), (3), and (4) amended, p. 1437, § 117, effective July 1.

ANNOTATION

Damages for breach of fiduciary duty. This section does not limit damages for a breach of fiduciary duty, but rather, the amount upon nonbreaching partner's contribution is the minimum assessable damages. Gundelach v. Gollehon, 42 Colo. App. 437, 598 P.2d 521 (1979).

Limited partner's remedy in a derivative suit is not limited to the return of his contribution with interest. Such a remedy is nonexclusive. Moore v. 1600 Downing St., Ltd., 668 P.2d 16 (Colo. App. 1983).

Partnership agreement is not void on its face and does not violate this section where agreement did not on its face guarantee that the limited partner would receive an unlawful priority over other partnership creditors. Alzado v. Blinder, Robinson & Co., Inc., 752 P.2d 544 (Colo. 1988).

Entry of a judgment against a partnership by a limited partner was not violative of this section. This section merely provides that the liabilities owed by the partnership to general creditors must be paid before such judgment is satisfied. Horizon Venture v. Horizon P'ship, 791 P.2d 1223 (Colo. App. 1990).

This section, considered in conjunction with §§ 7-61-103 and 7-61-118, does not bar suit nor entry of judgment and only reflects that a limited partner "shall not receive" a cash distribution in preference to creditors of the partnership when such distribution would result in insufficient assets remaining to pay creditors. Horizon Venture v. Horizon P'ship, 791 P.2d 1223 (Colo. App. 1990).

Absent a statement in the certificate to the contrary and irrespective of the nature of the contributions, a limited partner has only the right to demand and receive cash in return for his contribution. Horizon Venture v. Horizon P'ship, 791 P.2d 1223 (Colo. App. 1990).