Article 35 - Distribution of Partnership's assets on winding up

(1) This Article contains Default Rules about:
(A) the way in which a Partnership's assets must be dealt with after its break up; and
(B) the settlement of accounts between the Partners.
(2) In this Article "Partner" includes a person who ceased to be a Partner on or after the break up.
(3) The Partnership's assets must be dealt with as follows:

Step 1

Each Partner must pay to the Partnership any amount which he owes to it.

Step 2

The Partnership must pay its debts and discharge its Liabilities to persons other than Partners.

If the Partnership does not have sufficient assets to do this in full, the Partners must contribute amounts, in the same proportions as they would be liable to bear any Partnership Losses, in order to make up the shortfall.

Step 3

The Partnership must pay to each Partner any amount (other than in respect of capital) which it owes to him.

If the Partnership does not have sufficient assets to do this in full, the Partners must contribute amounts, in the same proportions as they would be liable to bear any Partnership Losses, in order to make up the shortfall.

Step 4

The Partnership must pay to each Partner any amount which it owes to him in respect of capital.

If the Partnership does not have sufficient assets to do this in full, it must pay the remaining assets to the Partners in proportion to their respective capital contributions.

Step 5

The Partnership must distribute any surplus among the Partners in the same proportions as they would be entitled to share any Partnership Profits.
(4) If a Partner is unable, as a result of his insolvency, to contribute an amount required under Step 2 or 3, the other Partners must contribute that amount according to the proportions in which they are liable (as between themselves only) to contribute under that Step.