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Partnership Law Act 2019

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

84: Application of assets

You could also call this:

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

When a partnership is dissolved, you need to use the partnership's assets in a specific order. First, you must pay off any debts the partnership owes to people who are not partners. Next, you need to pay back any advances that partners made to the partnership. These are different from the money partners put in as capital. After that, you should pay back the capital that each partner contributed to the partnership. If there's any money left over after all of this, you should divide it among the partners based on how they agreed to share profits. Remember, if there's not enough money to pay everything, you should pay what you can in this order, giving each person their fair share of what's available at each step.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS206104.

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

84Application of assets

  1. The assets of the firm, including the sums (if any) contributed by the partners to make up losses or deficiencies of capital, must be applied in the following manner and order:

  2. in paying the debts and liabilities of the firm to persons who are not partners in the firm:
    1. in paying to each partner rateably what is due from the firm to the partner for advances (as distinguished from capital):
      1. in paying to each partner rateably what is due from the firm to the partner in respect of capital:
        1. in dividing the remainder (if any) among the partners in the proportion in which they are entitled to share the profits.

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