Failure to Strictly Comply With Conditions Precedent to Removal of General Partner Excused

Posted: December 10, 2025 / Written by: Jeffrey M. Eilender, Thomas A. Kissane, Samuel L. Butt, Joshua Wurtzel, Channing J. Turner / Categories Business Divorce, Contracts, Partnership Agreement

Failure to Strictly Comply With Conditions Precedent to Removal of General Partner Excused

On November 25, 2025, the First Department issued a decision in 242 Tenth Investors LP v. GVC 242 Tenth Sponsor, LLC, Case No. 2024-06715, reversing the motion court's determination that a limited partner's notice of removal of the general partner was invalid for failure to strictly comply with conditions precedent set forth in the limited partnership agreement and, in so reversing, excusing strict compliance, explaining:

Supreme Court should not have granted defendants’ motion dismissing the cause of action for declaratory/injunctive relief, in which plaintiffs sought a declaration that the removal of the Sponsor as general partner of the parties’ partnership was valid and enforceable. The record does not support the finding that the removal was invalid as a matter of law. Although the removal notice was arguably untimely pursuant to the terms of the LPA, the Sponsor received actual written notice by email within the prescribed notice period, and written notice by certified mail only four days after the notice period expired. In addition, defendants failed to show they experienced any prejudice from the timing and manner of the delivery.

Plaintiff’s failure to satisfy the contractual provision requiring, as a condition for removal, that plaintiff either secure the release of all the Sponsor’s loan guarantors from their guaranties or cause a creditworthy indemnitor to indemnify the guarantors does not render the removal void as a matter of law. Triable issues exist as to whether the Sponsor’s blanket refusals to cooperate in its removal and in any related transition issues — which apparently included plaintiff’s efforts to vindicate the loan guaranties, as well as the Sponsor’s statement to plaintiff that it had no right to speak to any lenders — had a direct impact on plaintiff’s ability to fulfill the condition precedent to completing the removal.

Moreover, the Sponsor is not entitled to summary judgment on the basis that plaintiff did not satisfy the LPA’s requirement, found in section 11.1(e), that the Sponsor be provided with a 30-day “opportunity to cure” its defaults. The alleged breaches relating to the Sponsor’s undertaking a substantial rehabilitation of the property without plaintiff’s approval were not breaches that could have been cured at the time the removal notice was sent, as evinced by the fact that the renovations were largely complete and the partnership’s funds were already spent by that time. These breaches are not the type that can reasonably be found subject to cure based merely on the speculation that the Sponsor might have been able to obtain retroactive investor approval for completed renovations. This conclusion holds especially true because the evidence showed that the Sponsor, during the period after which the removal notice was sent and before it became effective, denied any breach, did not seek retroactive approval, and made clear that it had no intention of refunding the renovation expenditures.

While strict compliance with conditions precedent is typically required, especially to remove a general partner or managing member, as this case shows, the First Department is sometimes willing to make an exception--especially when the alleged wrongdoer's own actions prevented strict compliance. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning compliance with conditions precedent to removal of a general partner or managing member.