Indiana § 23-4-1-40 - Rules for distribution
Full text of Indiana Indiana Code § 23-4-1-40 — Rules for distribution, with citation guidance and answers to common questions.
§ 23-4-1-40. Rules for distribution
Sec. 40. In settling accounts between the partners after dissolution, the following rules shall be observed, subject to any agreement to the contrary:
(a) The assets of the partnership are:
(I) The partnership property.
(II) The contribution of the partners specified in clause (d) of this paragraph.
(b) The liabilities of the partnership shall rank in order of payment, as follows:
(I) Those owing to creditors other than partners.
(II) Those owing to partners other than for capital and profits.
(III) Those owing to partners in respect of capital.
(IV) Those owing to partners in respect of profits.
(c) The assets shall be applied in the order of their declaration in clause (a) of this paragraph to the satisfaction of the liabilities.
(d) Except as provided in section 15(2) of this chapter, the partners shall contribute, as provided by section 18(a) of this chapter, the amount necessary to satisfy the liabilities; but if any, but not all, of the partners are insolvent, or, not being subject to process, refuse to contribute, the other partners shall contribute their share of the liabilities, and, in the relative proportions in which they share the profits, the additional amount necessary to pay the liabilities.
(e) An assignee for the benefit of creditors or any person appointed by the court shall have the right to enforce the contributions specified in clause (d) of this paragraph.
(f) Any partner or his legal representative shall have the right to enforce the contributions specified in clause (d) of this paragraph, to the extent of the amount which he has paid in excess of his share of the liability.
(g) The individual property of a deceased partner shall be liable for the contributions specified in clause (d) of this paragraph.
(h) When partnership property and the individual properties of the partners are in possession of a court for distribution, partnership creditors shall have priority on partnership property and separate creditors on individual property, saving the rights of lien or secured creditors as heretofore.
(i) Where a partner has become bankrupt or his estate is insolvent, the claims against his separate property shall rank in the following order:
(I) Those owing to separate creditors.
(II) Those owing to partnership creditors.
(III) Those owing to partners by way of contribution.
Formerly: Acts 1949, c.114, s.40. As amended by P.L.34-1987, SEC.304; P.L.230-1995, SEC.8.
Frequently Asked Questions About Indiana § 23-4-1-40
What does Indiana Code § 23-4-1-40 cover?
Section 23-4-1-40 ("Rules for distribution") is part of the Indiana Code, the codified statutory law of Indiana. It sets out the legal rule or procedure described in the text above. Statutes are amended regularly, so always verify against the official source.
How do I cite Indiana § 23-4-1-40?
A common citation format is "Indiana Code § 23-4-1-40" (Indiana). Legal writing may require the code abbreviation, section number, and year or edition. Match the style required by your court, professor, or publisher.
Is this the official text of Indiana law?
No. This page is for research and education and may not include the most recent amendments. For official current law, check the Indiana official source linked on this page or consult a licensed Indiana attorney.
How does Indiana § 23-4-1-40 apply to my situation?
Statutes are interpreted in context, and application depends on your specific facts. Only a licensed attorney in Indiana can advise on how this section applies to you. Contact your state or local bar association for a referral.
Sources & Verification
Not legal advice. Verify against the official source and consult a licensed attorney in Indiana.