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Limited Partnerships Act 2008

General - Distributions to partners

44: Liability of partner to repay distribution

You could also call this:

"Paying back money you got from a limited partnership if it can't pay its debts"

Illustration for Limited Partnerships Act 2008

If you get a share of the limited partnership's money, you might have to pay it back. This happens if the partnership did not have enough money to pay its debts after giving you the share, and you knew this would happen. You have to pay the money back if you knew the partnership would be in trouble after giving you the share, according to the rules in section 42. You do not have to pay the money back after a certain time. This time is either 3 years after you got the money, or a different time stated in the partnership agreement, whichever is longer. You are no longer responsible for paying the money back after this time has passed.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1139193.

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43: Liability of general partner to repay unauthorised distribution, or

"General partners must pay back money if they break the rules and give out too much."

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45: Defence of partial solvency, or

"When a partnership has some money, but not enough, you might not have to pay as much if you can prove it could have survived with a smaller payment."

Part 2General
Distributions to partners

44Liability of partner to repay distribution

  1. A partner (A) to whom a distribution has been made at a time when the limited partnership did not, immediately after the distribution, satisfy the solvency test in section 42 must repay the distribution if A knew that, immediately after the distribution was made, the limited partnership would not satisfy the solvency test in section 42.

  2. A’s liability under subsection (1) ceases after the longer of—

  3. 3 years after the distribution is made; or
    1. the period specified (if any) in the partnership agreement.