Partnership Law Act 2019

Financial reporting, dissolution of partnership, and other miscellaneous provisions - End of partnership - Dissolving a partnership

83: Losses

You could also call this:

"How to handle money losses when a partnership ends"

When a partnership is ending, you need to know how to handle any losses. This includes money that the partnership has lost and any reduction in the value of the partnership's assets. You should pay these losses in a specific order.

First, you should use any profits the partnership has made to cover the losses. If there aren't enough profits, you then use the partnership's capital. Capital is the money or property that the partners have put into the business.

If there's still not enough money to cover all the losses after using profits and capital, the partners themselves have to pay. Each partner pays a share of the remaining losses. The amount each partner pays depends on how much of the profits they were supposed to get. For example, if you were supposed to get 25% of the profits, you would pay 25% of these remaining losses.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS206103.


Previous

82: Rules for distributing assets on final settlement of accounts, or

"How to share things when a business team breaks up"


Next

84: Application of assets, or

"How to use a partnership's money when it ends"

Part 4Financial reporting, dissolution of partnership, and other miscellaneous provisions
End of partnership: Dissolving a partnership

83Losses

  1. Losses (including losses and deficiencies of capital) must be paid—

  2. first out of profits:
    1. next out of capital:
      1. lastly, if necessary, by the partners individually in the proportion in which they are entitled to share the profits.
        Compare