Delaware has enacted the Delaware Revised Uniform Partnership Act (“DRUPA”), which governs the laws pertaining to Delaware general partnerships and limited liability partnerships. This Act has been codified under 6 Del. C. Section 15-101, et seq.
Under the DRUPA, a partnership is dissolved upon the occurrence of the following events: (i) the notice of a partner’s express will to withdraw from the partnership (in a partnership at will), (ii) in a partnership for a definite term, within 90 days of a partner’s disassociation, at least 50% of the remaining partners desire to wind up the partnership, or the express will of all partners to wind up the partnership, or the expiration of the term or completion of the undertaking; (iii) an event agreed to in the partnership agreement resulting in the winding up of the partnership business or affairs; (iv) an event that makes it unlawful for the business of the partnership to continue; (v) on application by a partner for the entry of a decree of judicial dissolution; or (vi) on application by a transferee of a partner’s economic interest, the Court of Chancery determines that it is equitable to wind up the partnership’s business. 6 Del. C. Section 15-801(1)-(6).
Similarly to a limited liability company and limited partnerships, under the DRUPA, a partner of a limited partnership can petition the Court to dissolve the company. The standard to obtain a court dissolution is governed by 6 Del. C. Section 15-801(5), which states as follows:
On application by or for a partner to the Court of Chancery, the entry of a decree of dissolution of a partnership by the Court of Chancery upon a determination by the Court of Chancery that it is not reasonably practicable to carry on the partnership business, purpose or activity in conformity with the partnership agreement[.]
Further posts will address case law addressing the standard imposed by the Court of Chancery in connection with obtaining such a court-ordered dissolution under the DRUPA in relation to general partnerships and limited liability partnerships.