Commercial Division Blog
Economic Interest Holders Did Not Have Standing to Dissolve Partnership
On August 7, 2017, Justice Livote of the Queens County Commercial Division issued a decision in BV III GP LLC v. Bridgeview III Assoc., 2017 NY Slip Op. 31923(U), holding that economic interest holders in a partnership did not have standing to dissolve the partnership, explaining:
As a general rule, the assignee of a partnership interest is only entitled to receive the distributions and allocations of profits and losses to which the assignor would be entitled. The partnership agreement provides that a person acquiring an interest in the Partnership, including the personal representatives of and heirs of a deceased Partner, shall have only such rights as are set forth in this agreement and, subject to the applicable requirements of the HDA, the General Partners shall have the power, in their discretion, to admit or refuse to admit as substituted Limited Partners, persons, firms or corporations who acquire the interest in the Partnership, or any part thereof, of a Limited Partner.
No replacement partners, general or limited, have ever been admitted to the partnership. Thus, the meeting on June 1, 2017, was a meeting of holders of economic interests, not a meeting of limited partners. The economic interest holders do not have authority to elect a general partner. Thus, the purported election is a nullity and plaintiff is a stranger to the partnership, without standing to maintain this action.
(Internal quotations and citations omitted).