Law Case Study

498 WordsJul 29, 20142 Pages
Lach v. Man O’War, LLC ISSUE(S): Was the restructuring of the Partnership business form invalid? Was the restructuring a conversion that violated KRS 275.370 and did the restructuring made it not feasible for the partnership to continue with business therefore violating KRS 362.490? RULE(S): KRS 275.370 in part states that a partnership or limited partnership may be converted to a limited liability company if it is approved by all the partners or by a number or percentage specified for conversion in the partnership agreement or, in the case of a limited partnership, by all the partners, notwithstanding any provision to the contrary in the limited partnership agreement. KRS 362.490 in part states that a general partner has all the rights and power and be subject to all the restrictions and liabilities of a partner in a partnership without limited partners, except that without the written consent of the specific act by all the limited partners, a general partner or all the general partners have no authority. They cannot do any act that will make it impossible for them to carry on the business of the partnership. APPLICATION: In this case The Supreme Court found that Wiseman and the LLC were not in violation of KRS 275.370. In order for them to have had done a conversion only one entity was needed. Wiseman and the LLC were not in any violation that dealt with KRS 275.370. The Supreme Court further more looked at the new Kentucky Uniform Limited Partnership Act KRS 362.2-102, et. seq. Then they looked in the Official Comments to 1102 of the Uniform Limited Partnership Act, “[I]n contrast to a merger, which involves at least two entities, a conversion involves only one. The converting and converted organizations are the same entity.” Wiseman and the LLC argued that they had the authority to perform all the acts they performed in order to restructure the

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